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Low Interest Rates - time to Refinance?

Low Interest Rates - time to Refinance?

Date Posted: September 8, 2020

Interest rates continue to be at historic lows and many Canadians are taking advantage of these low interest rates; either buying a home or refinancing their existing property.

What are your options when it comes to refinancing your home?

Many mortgage lenders offer their customers refinancing options. This allows homeowners to access the equity in their home that they have built up over time, by paying down their mortgage principal. Refinancing may involve changing the terms of your original mortgage agreement, and the refinanced portion may have a different interest rate than the original mortgage. You may have to pay fees to do this. 

You can borrow up to 80 percent of the appraised value of your home, minus the amount left to pay on your first mortgage.  

Example:

Louise is planning a home renovation project and is looking at refinancing her home to fund the renovation. Her house is currently worth $200,000 on the real estate market, and she still has $100,000 left to pay on her mortgage. Her mortgage lender calculates her credit limit for refinancing as follows:

$200,000 appraised value of the home x 80% maximum loan allowed = $160,000 loan amount based on appraised value - $100,000 less balance owed on current mortgage = $60,000 refinancing credit limit.

If the lender and Louise agree to refinance her home to the $60,000 limit, she would owe a total of $160,000 on her mortgage. 

To understand more about the Refinancing process; click here:

Contact your Mortgage Broker for trusted advice