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The Basics on Refinancing Mortgages in Oshawa

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Getting Pre-Approval

Getting pre-approved for your mortgage allows homeowners to see how they can best budget for a mortgage, better rates, and extra costs involved. Pre-approval can help establish a mortgage rate for a specific period of time that can help you lock up a good rate for a limited time. However, pre-approval does not mean potential borrowers are obligated to the specific bank or lender, and they can shop around for a better mortgage rate at no cost. This is a great way to get your feet wet in the mortgage market.

A Few Reasons

When looking to refinance a mortgage, you should consider the benefits involved. One of the main benefits is the low interest rates. Many people are put off by penalties, but really it's a numbers game. You should calculate the total cost of refinancing, which includes penalties and all extra fees, and compare it to your outstanding mortgage. The penalty for breaking a variable rate mortgage is usually the interest accrued in over three months versus fixed-rate mortgages that require a larger penalty, which is either based off more months or an interest rate differential penalty (IRD).

Getting Equity Out of Your Home

When you refinance your mortgage, you can get access up to 85% of your home's equity. You can use this to invest in a new business, renovate your house, pay for university, etc. There is more than one way to get home equity: you can apply for a home equity line of credit, take out a second mortgage, get a private mortgage, or renegotiate your terms.

Getting Rid of Debt

After gaining a worthy amount of equity through your mortgage payments, you can pay off high-interest debts by refinancing. You may even want to consolidate your debts into one big loan since interest rates are low. This is great if you are trying to pay off credit card balances, a car loan, a wedding loan, etc. Consolidating your debt can help take a load off your shoulders and save you money over time.

Ways to Refinancing Your Mortgage

There are many methods that homeowners should assess when planning on refinancing their mortgage. Such methods are breaking your mortgage contract, getting a home equity line of credit, or blending/extending your mortgage with the original lender. When breaking your mortgage contract, make sure to properly end the term before setting up a new one and to take care of all penalties, closing fees, etc. The home equity line of credit allows one to take advantage of their acquired equity and use the monetary value as they need as long as they pay it back. If you choose to blend and extend your pre-existing mortgage with your current lender, you need to do your research. Blended rates are usually quite high compared to other interest rates since they are a blend of your current mortgage rate added to the extra money borrowed. Just make sure that when you plan on refinancing mortgages in Oshawa, do all your research, tie up any loose ends, and consult with industry professionals before deciding on anything.


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