Refinancing your mortgage can be a great way to lower your interest rates and improve your overall financial status. By refinancing, you can reduce your debt or access the equity that you have built in your home to cover the costs of other investments or expenses. This can lead to substantial savings in the long-run, and it can also help you build and maintain a stronger credit history.
As you pay down your current mortgage, or when the value of your home increases, your home equity increases. When refinancing your mortgage, you can use this equity to obtain a loan for up to 80% of the value of your home when refinancing. The refinance will be used to pay off your current mortgage and secure a new mortgage with a different interest rate and new terms. Ideally, you will refinance for a lower interest rate to be paid over a longer period of time.
You can refinance your mortgage to pay for expenses such as:
- Renovating your home. If you find that your home needs significant repairs, or if you need to remodel your kitchen or add an addition to your home such as a bathroom, you can refinance your mortgage to cover your costs.
- Buying a new or second home. Whether you are looking to relocate or to buy a rental or investment property, you can refinance your mortgage to help cover the expenses of buying another house.
- Consolidating your debt. Instead of making monthly payments on your high-interest credit cards, money owed to the Canada Revenue Agency (CRA), or student loans, you can pay off these and other debts using the funds from a refinance.
- Starting a business. If you are ready to take the leap into entrepreneurship, refinancing your mortgage can give you the capital you need to get started. By doing so, your home becomes an asset that you can leverage to invest into your future.
- Paying for your child’s education. This is one of the most important investments you can make for your family. Use the funds to pay for private school or college or university to help secure your child’s future.
Note that refinancing is only beneficial when the market and timing are right. For example, if market rates are low, you should consider refinancing quickly in order to take advantage of the low interest rates before they rise. However, if interest rates are expected to decrease more over the coming months, perhaps it is ideal to wait.
Additionally, there are various refinancing options available, including second mortgages, home equity lines of credit, and loans secured using your home as collateral. Therefore, it is important to find a reputable mortgage broker to help you explore the refinancing options that would benefit you the most.
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Contact me today to learn more about the best time to refinance your mortgage and how it can improve your overall financial outlook.