When Should You Consider Mortgage Refinancing?
For most homeowners, mortgages take a considerable chunk of their paychecks. Making sure your budget is up to date is important to ensure monthly cash flow.
In simple language, mortgage refinancing is getting a new mortgage to replace an existing one. It has several perks when taken at the opportune time and for the right reason. In some cases, like when you have too much debt or a bad credit score, refinancing can be risky.
When should you then consider mortgage refinancing? Here are a few good examples:
To Take Advantage of Low-Interest Rates
Breaking a mortgage contract can attract prepayment penalties. It’s okay to be cautious about the consequences, but it’s essential to look at the bigger picture. A lower rate may not always put you financially ahead in the long run.
Your lender may charge a penalty equivalent to three months' interest if you terminate a variable rate mortgage. With a fixed-rate mortgage, your penalty will either be the interest rate differential penalty (IRD) or three months' interest. A mortgage refinancing expert from Edmonton can assess your situation and advise if refinancing makes sense.
To Renovate Your Home
Home renovations can increase the market value of your home. You are able to refinance your mortgage to pull out equity to update your kitchen, bathroom, or even replace your roof. Talk to a mortgage professional to be sure that this is the right decision for you.
To Consolidate Debt
Life can be frustrating when you have several high-interest debts. You may have credit card bills, a car loan, and a line of credit at the same time.
If you have substantial equity in your home, you can refinance your mortgage and use the money to pay the debts. One monthly payment is more manageable.
To Increase Your Monthly Cash Flow
As we have discussed, it's sometimes wise to refinance to a mortgage with lower interest. It can potentially reduce your monthly installments, meaning you'll spare some dollars every month.
If you are continually struggling to meet your economic obligations, refinancing may free up some cash.
Applying for Refinancing
If you’re considering refinancing your first step should be to call a mortgage broker. They will discuss with you :
- Whether you need the loan and if refinancing suits you
- Monthly repayments
- Your credit situation
- The associated costs
If refinancing is a fit for your situation, your mortgage broker will help you with the next steps in the process.
Mortgage Refinancing in Edmonton
Mortgage refinancing is beneficial to the borrower in some select instances. Lower interest rates should not be the only inspiration to enter into the arrangement. There can be penalties involved, and most likely, you will be extending your loan period.
If you are looking for a mortgage refinancing service in Edmonton, Dominion Lending Centers will assist you. You can visit our website on https://www.dominionmortgagebroker.ca/ to learn about our services in more detail.
Talk to us today, and our experienced team will address your concerns about mortgages and refinancing.Request Mortgage Info