A mortgage must not be lived as a life sentence. If you want a lower mortgage rate, consolidate your debt, or tap into the capital of your home, you can consider Home refinancing. Since July 9, 2012, it is possible to refinance up to 80% of the value of your home.
Reasons for mortgage Home refinancing
To enjoy a lower interest rate
Do not be discouraged by the penalties, first of all, find out about the numbers. Depending on the penalty and the amount of your mortgage, breaking your contract for a lower interest rate can save you a lot of money in the long run. If you have a floating rate mortgage, expect to pay a penalty equal to three months of interest, and if you hold a fixed rate mortgage, then you will likely pay more than the value of three months of interest or even a differential interest rate penalty (IRD).
To access capital (cash) while staying in your home
By opting for refinancing, you can have up to 80% of the value of your home minus the value of your current mortgage. See this as a source of investment, or the opportunity to undertake renovations, or even as funds that will provide an education for your children. There are several ways to access this cash, the break in your mortgage is one, apply for a line of credit or mix and extend your current loan are others.
To consolidate your debt
If you have good capital through the value of your home, you will be able to repay the high interest rate of the debt through Home refinancing. If you have a number of debts, like, for example, a loan for the purchase of a car, a line of credit or several credit cards, you could consolidate all the debts through a variety of options available for refinancing.
Mortgage refinancing methods
There are several options available to you for refinancing; these include: breaking your mortgage contract, applying for a home equity line of credit, or a mix with extending the loan with your credit.
Break your mortgage contract
If you’re thinking of not honoring your mortgage, take action because to get a lower interest rate or even access capital on your home, stop your mortgage and take a new one with another institution.
Add a line of credit on real estate capital
A home equity line of credit gives you access to the equity in the home, the amount of which is left to your discretion. You are only responsible for paying the monthly interest according to your current balance. You can access this line of credit from your lender and a small group of other bankers.
Mix and extend the mortgage
Your institution can offer you a “mixed rate”; essentially, an “amalgam” of your current mortgage rate with additional liquidity that it lends you at the market rate. The weighted rates are often higher than the most competitive rates, so be sure to compare with the “breach of contract” option so you do not miss the chance to save.
Mortgage Refinancing Costs
The costs of Home refinancing your mortgage depend on the strategies you take to access property or reduce your interest rate. Be aware, however, that whichever method is chosen, there will always be significant costs such as legal procedures for changing the title of your financing. On the other hand, the good news is that if the value of your mortgage balance is greater than $ 200,000, many brokers and / or lenders will cover this fee.
If you break your mortgage agreement in the middle of your term, access to capital or interest rate reduction will be charged by the lender through compensation for mortgage break-up or by a penalty for early repayment. Fixed mortgage rates are those that have an interest rate higher than the sum of three months, otherwise it is the payment of the interest rate differential (IRD). Moreover, for variable mortgage rates it is simply three months of interest that will be charged.