I am sure when there are talks about fiscal prudence; you might have often come across the term mortgage refinancing. So what does it mean to refinance mortgage?
When the loan against your existing mortgage is paid off you can use the same mortgage to create a fresh loan if required. This is a perfect tool to convert a variable loan into a fixed rate one or generate funds in a situation where you might require additional resource base. This is no doubt an option only for borrowers who have a strong credit history. The mortgage refinancing also leads to a lower interest outgo.
It is quite apparent that mortgage refinancing is an option when you need additional funds. You can use this route for many purposes including:
• Home renovation;
• Buying a second or additional property;
• Investing in other asset classes like stocks/commodities;
• Buy a car or a boat or other tools of convenience.
Another reason why mortgage refinancing could come in very handy is debt consolidation. If the abnormally monthly outgo is limiting your means and you are looking at ways to lower the interest payout, one simple solution could be debt consolidation. Apart from offering lower rates of interest on these refinanced mortgages, most Canadian banks also offer attractive pre-payment options too which will enable you to pay up your debt faster.
That said here is a look at some of the key ways in which an individual can refinance the existing mortgage and improve the overall cash flow. Whether you are approaching a bank or a financial institution, it is always advisable to discuss the possible scenarios with an expert before taking a call. The key benefit is the advisor can give the right direction to you based on the long-term goals and ground realities:
• Mortgage Add–On: In this, you can borrow as much as 80% value of your home that is used as a mortgage. Of course, the remaining mortgage amount from the previous would be subtracted.
• Flexible Loan Plan: This is an option in a situation where an individual’s home equity is equal or more than 20%
• Secured Credit Line: This is yet another mortgage refinancing alternative used by many Canadian banks. The interest rates for these are generally lower than an unsecured credit line.
Therefore, it would not be wrong to say that mortgage refinancing is an easy solution to address any type of long-term finance requirement. It is a unique tool that helps you retain your individuality and be self-sufficient. With careful planning, you can re-acquire fresh loans as long as you are of good credit standing. Be guided off the bat with our mortgage payment calculator.
Get the best mortgage refinance rates now.
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