There are many reasons to consider mortgage refinancing to replacement your existing mortgage loan with another lender under different terms.
A borrower in Canada may consider refinancing his or her loan for diverse reasons. If you’re not sure whether you should go for a mortgage refinance or not, consider using the services of best mortgage brokers.
The following are some of the different reasons you should consider refinancing.
- Build equity faster
If you are in a position to increase your monthly payments — because of an increase in salary or a fortune — you may want to switch from a 20-year mortgage to a 15-year mortgage.
This switch allows you to build equity on the house quickly. If you consider a bi-weekly refinance option, you’ll quickly build up equity on the house without putting out a large amount of money each month.
- Change the loan type
With lower mortgage rates, you can get a fixed mortgage rate for more peace of mind. If you wish to move from a variable mortgage rate to a fixed rate mortgage rate (due to its added stability), you should consider refinancing. If your variable rate is adjusting, you should consider refinancing and getting a fixed rate mortgage.
- Use the equity you have built up in your home
If you have built up equity in your home (the difference between the amount owed and the home’s worth), you can use cash-out refinance loan to tap into the equity.
You can use this option to make larger purchases, pay off credit card debts or send a child to college. This refinance option is a perfect way to become debt free.
- Pay off the mortgage sooner
If have landed a bonus at work or inherited money and you wish to pay off your mortgage sooner, you should consider mortgage refinancing offered by Canadian mortgage brokers. With refinancing, you can choose to refinance down from a 30-year loan to a 20-year loan.
When you pay off your mortgage loan earlier, you save a significant amount from interests over the life of the loan.
5. You find better mortgage rates
When you first obtained your mortgage, you may have had higher rates than the best mortgage rates being offered today. By lowering your mortgage rate from a higher rate, you can save thousands over the life of your mortgage.