Toronto Mortgage Refinancing Strategies
Here's a closer look at the key elements of a Toronto Mortgage Refinancing scenario.
First of all, a mortgage refinancing will involve the creation of a new mortgage to payback or retire the existing mortgage.
There are three basic reasons for refinancing:
1. Reduce the interest Rate
2. Increase the amortization period to lower the monthly payment.
3. Acquire additional funds against the equity of the property for different purposes.
While any mortgage refinancing inititiave can be to take advantage of all three reasons, the majority of refinancing activities are to either lower interest rate or create a new source of funds.
Additional funds can be required for such purposes as to:
1. Consolidate existing bills
2. fund home furnishings, repairs, and renovations.
3. Pay for college education.
4. Provide additional funds for retirement
5. Pay for a family vacation.
6. Payoff mortgage and property tax arrears that can cause a foreclosure.
Most mortgage programs do not have any specific requirements as to how new funds can be used, making Toronto mortgage refinancing a popular strategy for gaining access to additional capital, regardless of the reason or use.
Refinancing can also help secure future interest rates in a number of ways.
First, if the existing mortgage is carrying a variable interest rate, the mortgage can be refinanced at any time by a fixed interest rate mortgage for several years in the future. In the current market, this is a very common strategy being used due to the expectation that interest rates will continue to rise in the near future.
Second, if the existing mortgage is carrying a fixed interest rate, the mortgage can still be refinanced to lock in a long term fixed interest rate, but the borrower will have to pay a prepayment penalty if the existing rate is higher than the new rate. To reduce the impact of the prepayment penalty on cash flow, some mortgage companies will blend the old mortgage rate and new mortgage rate together, relative to their respective terms in order to come up with a new rate that does not require you to pay a prepayment penalty out of pocket.
Toronto mortgage refinancing strategies can also obtain new mortgages up to 90% of the appraised value of the property provided that the borrower can obtain mortgage insurance. While the interest rate will be slightly higher to cover the cost of insurance, the rate secured will still represent the lowest cost form of additional mortgage financing on the property.
With such a large number of potential mortgage options to choose from, it can be hard to know what approach to take or what mortgage program best fits your requirements.
If you're seeking Toronto Mortgage Refinancing Options and want to make sure that you're taking the right approach and getting the best deal for you needs, go to www.joewalsh.ca and speak directly with Toronto Mortgage Broker Joe Walsh.
Joe has been doing mortgage refinancing for over 30 years and can walk you through exactly what you need to do to achieve the results you're looking for. He also offers a ton of free information that can help you better understand the mortgage process.
by: Joe
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