Monday, January 24, 2022 08:20

Mortgage Refinancing

Refinancing a mortgage means paying off an existing mortgage and replacing it with a new one. There are many common reasons why homeowners refinance:

  • The opportunity to obtain a lower interest rate
  • The desire to convert from a fixed rate mortgage, to an adjustable rate mortgage
  • The opportunity to tap into home equity in order to finance a large purchase or renovations
  • The desire to consolidate debt

Some of these motivations have both benefits and pitfalls. Refinancing can cost between 2% and 4% of the mortgage loan’s balance. This cost would include a penalty payable to your financial institution, an appraisal may be needed, title search and lawyer’s fees are payable. It is important for a homeowner to determine whether his or her reason for refinancing offers true benefit. This is where your professional mortgage broker can help. Does it make sense to refinance or would it be more beneficial to put a second mortgage behind your existing mortgage?

As on March 18th 2011 you can refinance to a maximum of 85% Loan-To-Value.

Loan-To-Value or LTV is the relationship between the loan you are taking out, ($200,000) and the value of your property, ($250,000). With a loan amount of $200,000 and a property valued at $250,000 the LTV would be 80%.