Refinancing Your Mortgage in Ontario
Improve the terms of your mortgage.
What is Refinancing a Mortgage?
Refinancing a mortgage occurs when you take out a new mortgage to replace your current mortgage. When you refinance your mortgage, the remaining amount of your current loan is paid off and a new loan is created.
Common reasons to refinance your mortgage includes:
- To get a better interest rate.
- To shorten your mortgage term.
- To lower your monthly payments.
- To change your mortgage structure.
- To take out equity to invest elsewhere.
- To consolidate debt from other loans or credit cards.
- To manage an emergency situation.
Homeowners will often refinance because they want to switch between mortgage lenders to find one with more favourable options — although you may choose to refinance with the same lender.
If you are switching lenders, then it is important to be aware of the penalties associated with breaking your original mortgage. Examining these fees will help you decide whether refinancing will be financially beneficial for you.
Why work with a mortgage broker to refinance?
It can be very advantageous to work with a professional mortgage broker when refinancing.
Not only can a broker help you compare mortgage options to find the best alternative solution, they can also help you assess the financial benefits of a switch
Make sure that you’re refinancing your mortgage for the right reasons.
Common Types of Mortgage Refinancing
There are a number of ways that homeowners can refinance their mortgage. Depending on your reasons, there might be one refinancing option that is a better fit for your situation. Learn more about the different options available from our team.
Are you struggling to find the funds for your big home renovation project? Refinancing may offer the perfect solution. Homeowners can use the equity that you’ve built up in your home is a great way to fund the renovation that you’ve been dreaming of.
A mortgage can be used to consolidate your existing debt from other loans, credit cards, or unsecured lines of credit.
Mortgages will offer much lower interest rates and can help reduce the amount you pay on a monthly basis.
A home equity loan is any type of loan that uses the equity of your home as collateral.
Home equity loans will typically have lower interest rates, more flexible options, and allow access to more funds than unsecured loans.
A reverse mortgage is a type of loan that allows you to access equity in your home and convert it into tax-free funds. Reverse mortgages are designed to be used by Canadians who are 55+ years of age and are looking to live more comfortably in their retirement.
Frequently Asked Questions About Refinancing
When is the best time to refinance your mortgage?
Finding the best time to refinance is tricky, as the answer will depend on your unique situation — and you may not have the luxury of choosing to wait. At the end of the day, the best time to refinance your mortgage is typically when the right opportunity presents itself.
Over the course of your mortgage, you will improve your credit rating as long as you continue to consistently make payments on time. A better credit score can help put you qualify for a mortgage with more favourable interest rates or lower monthly payments. If your financial situation changes significantly, this might indicate an opportunity to refinance.
Can you refinance a mortgage with bad credit?
It is certainly possible to refinance a mortgage with a poor credit rating, but it can be tricky to navigate this process without the help of a professional. Individuals with bad credit should not expect low interest rates and may need to rely on B-lenders or government-backed mortgages in order to refinance.
If you have bad credit and you are looking to refinance your mortgage, make sure that you have enough equity built up in your home. Look for ways to improve your credit score in the short-term and continue to make monthly payments for utility bills, credit cards, and your existing mortgage. These strategies will improve your application.
Does mortgage refinancing require appraisal?
Yes. Before you are eligible to refinance your mortgage, a professional appraiser will need to visit and assess your home to determine its value on the market. Most lenders will require a formal appraisal document be submitted as part of the application process for refinancing.
A home will require an appraisal as the lender will want to ensure that the home’s value exceeds the outstanding balance of your current mortgage. Lenders will want to be sure that they are offering the appropriate loan, based on your home’s value.
Before scheduling an appraisal, you should prepare documentation detailing any recent renovations and additions, past home inspections, blueprints or property surveys for your home, and a recent copy of your Property Tax Assessment Bill.
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