Step-by-Step Process to Refinancing Your Mortgage
Step One – Refinancing at the Right Time
You can refinance at any time during your term or when your mortgage matures, but it’s important to understand the benefits and costs of doing so.
In some cases, it may make sense to break your mortgage to access a better interest rate if the penalty is lower than the cost of breaking the term. Conversely, if you can’t make the penalty back, increasing your existing mortgage (we call this “blending”), could be a better option.
When you refinance a mortgage, you start paying interest immediately. If you want to access the money right away, then you’ll typically find this acceptable. But, if you don’t need it right away, you may want to consider options with components, such as a re-advanceable mortgage.
Once your mortgage has reached maturity, there are no penalties.
There are a number of reasons why people choose to refinance their mortgages, but here are some common examples:
- Debt Consolidation
- Investments (stocks, bonds, mutual funds, RRSPs, etc.)
- Property Investment
- Provide Family Member with a Down Payment
- Purchase a Vehicle
Assuming you qualify for this extra amount of money, the maximum you can borrow is 80% of the appraised value of your property, which you can determine through an assessment.
Step Two – Pick Your Rate and Term
Pro-Tip: It is advised that you begin the discussion about refinancing at least 120 days prior to its maturity date to ensure there is sufficient time to secure a rate. We are available anytime to discuss.
By having a clear idea of your personal and financial goals, you’ll be better able to select the type of interest rate and term you want. We can walk you through the process and answer any questions you may have.
Step Three – Apply For Refinancing
Refinancing applications are very straightforward as long as your paperwork is in order. You’ll need to update your mortgage profile to provide current information, such as your employment and income information, debt and credit status, and current property value. We can help you by outlining everything that is required.
When you apply online, you’ll receive an immediate response that includes a list of required documents based on your profile.
Costs of Refinancing
Whenever you refinance, there will be a legal fee that ranges between $850 to $1,500 depending on your conditions and the province in which you live.
Appraisals are typically around $350 and are covered for mortgages in excess of $300,000.