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Mortgage Refinancing in Toronto

What is Mortgage Refinance?

Mortgage refinancing entails a renegotiation of your current mortgage loan agreement. Refinancing allows you to access your equity, as well as reduce borrowing costs by leveraging low-interest rates. Among the benefits of mortgage refinancing are paying off your current mortgage and debts and replacing them with a new mortgage at a lower cost.

Such an arrangement also allows you to increase your mortgage loan amount for financing larger expenses such as renovations or purchasing additional properties. The process also includes transferring, renewing, or porting your mortgage.

There might come a time when it makes financial sense to refinance the mortgage on your Toronto home. Oftentimes, mortgage refinancing is seen as a better alternative to taking a more expensive second mortgage to cover expenses such as education fees or additional home renovations. Under certain circumstances, opting out of your current mortgage and renegotiating a mortgage is preferable, as it allows you to find better terms and rates that will suit your current financial needs.

Why Do People Refinance Their Mortgages?


  • To take advantage of lower interest rates.Many people choose to refinance their mortgages to reduce monthly payments. After all, a small reduction in rate can add up and substantially impact how much you pay long-term. Refinancing is a good option, especially when interest rates are low, because it provides the extra benefit of getting more savings per month.
    It’s possible to reduce a 30-year term, for example, to a 15 or 20-year term. Low-interest rates also allow you to cover a larger mortgage amount, and you have the option to maintain the same payment schedule but for larger amounts and a shorter duration. In some cases, homeowners are able to enjoy both reduced terms and reduced monthly payments, resulting in thousands of dollars in savings over time.
    To find out if refinancing is beneficial in your case, talk to your mortgage broker and weigh your options.



  • To obtain access to home equity.If you’ve stayed in your Toronto home for a long time, it’s highly likely that its equity has already increased over the years. This home equity can then be used as a commodity. You can use up to 85% of the equity of your home to finance renovations, pay for education or consolidate high-interest debt.
    Equity on your home is the current market value of your home, less the unpaid balance of mortgages against it. Loans covered by home equity have much lower interest rates and can be used to consolidate expensive debts. However, if the equity on your home is less than 20%, this is not a feasible option.
    It’s always best to seek assistance from an experienced mortgage broker in Toronto to find the most suitable option for you.

Refinancing Options

  • Early closure of the current mortgageYou can opt to close your current mortgage early by paying off the mortgage and any other debts against the property, then taking out a new mortgage with more suitable rates and terms.


  • Add a home equity line of credit HELOC: This option allows you to borrow as much as 65% against the equity on your home through a home-equity line of credit (HELOC). You use what you need and pay interest only on the amount you have borrowed. You can pay back and borrow from the HELOC as required. You can get a HELOC in addition to your existing mortgage without needing to pay prepayment penalties or break your mortgage.


  • Blend and extend: Some lenders allow for a renegotiation of your interest rates before the end of your mortgage term. Also called early renewal, this option blends current rates with existing rates, resulting in a lower number. This allows you to enjoy a lower rate during the extension of your existing mortgage term while also saving on prepayment fees.


  • Adjust your amortization period: You can also opt to shorten your amortization period to save thousands of dollars over time if your current financial situation permits. Another option is extending your amortization period in favor of reducing your monthly payouts.

Some Of The Main Reasons To Refinance Your Mortgage

Proper Refinance Provides You With An Additional Fund Of Money

Mortgage refinancing pays the current mortgage or other credits or debts against your property and creates a new mortgage. There is transferring, renewing, and porting involved in the process among other things. Refinancing the mortgage is a good option for many different situations and people. Typically if refinancing is done properly, it provides you with an additional fund of money.

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When Should You Consider Refinancing Your Mortgage?






Home Renovation





Major home improvement projects tend to be expensive. Loans against your credit cards or from banks typically have very high-interest rates. An equity or refinancing loan can cover the cost of labor and materials needed for renovation, making it a very viable option for many. Compared to renovation store cards, refinancing offers a much lower interest rate. For this reason, many homeowners who choose refinance do so with home renovations in mind. That being said, it is essential to plan adequately before starting renovations. Even with a mortgage refinancing loan, there still has to be enough lead time to ensure that all necessary requirements are processed according to schedule. Interested homeowners should apply for refinancing at least a month before they plan to start their home renovation project. When dealing with traditional lenders, it is smart to begin the refinancing process at least four weeks before starting on the renovation project. Submitting applications early saves you from paying fees and a higher interest rate. If traditional mortgage lenders like banks turn you down, you can always turn to a private lender or use a platform like BLender. However, keep in mind that alternative lenders charge higher mortgage rates than traditional lenders. Hence, they should be used as a temporary solution with shorter loan terms or as a last resort. It is always advisable to refinance a mortgage with your bank. In case of doubt, consult a certified mortgage broker to help you find the best options..









Debt Consolidation





Different types of debts like credit card loans and other personal debts can be consolidated, so they’re easier to manage. Through debt consolidation, you can combine payments on multiple high-interest loans into one smaller payment made every month through an equity loan. Doing so can help you create an ideal, more manageable budget for your lifestyle, making it easier to manage your cash flow. Most people with poor credit scores in Canada can attest to having bad debts with higher repayment requirements. Debt consolidation allows borrowers to tackle loans with high interests (bills, overdue credit card accounts) through monthly payments. This can be very helpful during retirement or times of financial strain and keeps you from accumulating more debt. In cases of poor credit scores, mortgage refinancing for debt consolidation can also help with credit repair. Depending on the situation and the lender, some borrowers may have to close accounts associated with their existing debts. To improve your credit score, make sure to use the money sent by the mortgage refinance lender to settle as many debts as possible. By significantly reducing the outstanding balance on credit cards, you can improve your credit scores too. A good credit score will impress more lenders, allowing you to access any mortgage you want whenever you need it and at lower interest rates. To find the best ways to reduce debt and increase credit scores, work with a mortgage broker today.









Money for a Property Down Payment





Real estate is one of the most enticing industries for upcoming investors. However, coming up with enough money for such ventures is a big challenge for most people. In most cases, savings alone are not enough. High property prices in many regions, including Oakville, Mississauga, Ottawa, and others, means you must come up with other sources of financing to buy the property you want. With mortgage refinancing, high property costs do not have to be a limiting factor. It is a perfect alternative considering the few financing options available for investors. Most Canadians are discovering the benefits of mortgage refinancing in the real estate investment industry. The money from mortgage refinancing can be used to purchase another home or make a down payment on another property. It works for domestic, commercial, or income properties. The stringent policies and regulations set by traditional lenders make it hard for most people to acquire the loans they need. This forces most borrowers to turn to alternative lenders, who in turn charge exorbitant fees. Mortgage refinancing can help you avoid that and still achieve your dream by helping you get into the real estate sector.









Paying Off a Student Loan





The constantly increasing cost of tertiary education leaves many people searching for loans to finance their studies. Such a loan is also called a student loan cash-out refinance, and it works by letting you use your existing home equity to settle student loans. Parents who are also homeowners can turn to mortgage refinancing to meet their children’s higher education fees. The loan can be used for tuition, while the money from refinancing the house can be used to offset the higher interest debts.










Investment Opportunities





Not every homeowner chooses to refinance their mortgage in order to invest in properties. Some do it to explore other investment options, such as private mortgage investing. Since mortgage refinancing loans have lower interest rates, you can lend the money to people looking for private mortgages at a higher interest and make great returns. Formally known as ‘financial leveraging,’ the concept entails borrowing money at a lower interest and lending it at a higher one. Below is an example based on available home equity: Assume you can refinance the mortgage at $120,000 with a 2.75% fixed rate interest and a five-year term. The interest rate is not variable. If you can invest the same amount at a higher interest of 10%, you get to make a profit worth 7.25%. A home equity line of credit (HELOC) can also be a mortgage refinancing alternative. The credit line is a loan that uses the property as collateral. It has a higher interest rate than the mortgage, but it’s revolving. One of the advantages of using a HELOC is that it is usable and payable any time regardless of the interest accrued. Below is an example of how you can leverage the credit line: If you get a loan amounting to $110,000 with an interest of 3.75%, you can invest the amount and ask for a higher interest of about 12%. Your profit will be the difference in the rates, which is 8.25%. It is important to note that the interest rates for HELOC loans are usually variable and can differ alongside mortgage rates. Therefore, you must consider all parameters when calculating them to understand the refinancing amount you might get. Certified mortgage brokers can give you all the relevant information you need and help you compute the numbers in order to choose the best mortgage options. Remember, not all mortgages can serve your objectives. Compare them and select the one that is likely to give you the benefits you want.









Divorce or Separation





Divorce or separation is a delicate process, with the main contention being asset separation. Handling finances in such situations is usually challenging regardless of whether it involves separation from a business partner, common-law partner, husband, or wife. One of the best options for an amicable property division is using mortgage refinancing. You can draw from the available equity through mortgage refinancing and then use that money to buy out your partner. Under this arrangement, the property in question will be solely yours. However, you also have the option to look for a different co-owner to replace the previous one. Remember, the amount of equity available determines whether this will work or not.









Cash Flow Management





Real estate is one of the most enticing industries for upcoming investors. However, coming up with enough money for such ventures is a big challenge for most people. In most cases, savings alone are not enough. High property prices in many regions, including Oakville, Mississauga, Ottawa, and others, means you must come up with other sources of financing to buy the property you want. With mortgage refinancing, high property costs do not have to be a limiting factor. It is a perfect alternative considering the few financing options available for investors. Most Canadians are discovering the benefits of mortgage refinancing in the real estate investment industry. The money from mortgage refinancing can be used to purchase another home or make a down payment on another property. It works for domestic, commercial, or income properties. The stringent policies and regulations set by traditional lenders make it hard for most people to acquire the loans they need. This forces most borrowers to turn to alternative lenders, who in turn charge exorbitant fees. Mortgage refinancing can help you avoid that and still achieve your dream by helping you get into the real estate sector.









Retirement





The constantly increasing cost of tertiary education leaves many people searching for loans to finance their studies. Such a loan is also called a student loan cash-out refinance, and it works by letting you use your existing home equity to settle student loans. Parents who are also homeowners can turn to mortgage refinancing to meet their children’s higher education fees. The loan can be used for tuition, while the money from refinancing the house can be used to offset the higher interest debts.





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Difference Between Mortgage Refinancing and Mortgage Renewing

Most people use the terms mortgage renewal and refinancing interchangeably, but they have distinctive meanings. Renewal is when you get another mortgage with different rates from the same lender. You can agree to the same terms and rates or negotiate for better loan conditions. In most cases, the mortgage terms remain the same, with most lenders only allowing interest rates negotiation.

On the other hand, mortgage refinancing involves breaking the existing terms - you get a new loan with new conditions. You get to decide whether you want to remain with the same lender or work with a different one. There is no specific time for a mortgage refinancing. You can start the application process during the current term or when a renewal is due. Sometimes lenders can allow blend-and-extend mortgages. It means refinancing the mortgage before the mortgage term for the initial one elapses. You choose what you want to change and pay the fees attached to them.

Mortgage Refinancing In Toronto: Pros And Cons

Advantages Of Mortgage Refinancing



  • Mortgage refinancing provides additional funds for big home renovation projects.
    You can borrow up to 80% of the equity to pay for the new improvements even without default insurance.

  • You can also save money through the lower interest rates associated with mortgage refinancing.
    You get to make smaller payments for a longer duration, reducing the financial burden you could be facing.

  • Refinancing a mortgage creates room for lower amortization and interest rates.
    You can clear the loan quickly without being overwhelmed by the higher expenses or multiple loans.

  • Mortgage refinancing that comes with a longer amortization enables you to have a better repayment plan.
    You can make smaller payments every month and manage your cash flow properly.

  • Consolidating several debts and using money from mortgage refinancing to settle them is another benefit.
    Instead of multiple payments, you can focus on one with favourable rates.

Disadvantages Of Mortgage Refinancing



  • Penalties and other expenses associated with refinancing a mortgage can be too much to handle.

  • Processing the application takes approximately two to three weeks, which may be too long if you have an emergency.






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Refinancing Your Mortgage in Steps

1. You Need to Break Your Mortgage Early


Breaking a mortgage before the term makes sense if you need to use the equity on the house or take advantage of lower interest rates. It means doing away with the current mortgage and taking a new one with any lender you prefer.
It is important to note that breaking a mortgage early comes with penalties from the lender, especially traditional lenders like banks. In most cases, it is worth three months of interest. Therefore, you should only consider it if the new mortgage rates will be lower than the prepayment penalty you incur. That is the only way you will benefit.


2. You Need To Add a Home Equity Line of Credit


A HELOC or Home Equity Line of Credit allows you to access funds from the available equity of your property when you need to. It is similar to a credit card account, with the main difference being that a HELOC is secured. That is why the interest rates are lower.
Although it has many benefits, failure to keep up with the credit payments can affect your finances negatively. Show your responsibility by keeping up with the interest-only payments every month. Your current lender can give the line of credit, but you can also choose a different lender that deals with that mortgage type.

3. You Need to Blend and Extend You’re the Existing Mortgage


Some mortgage lenders allow the combination of current mortgages with new ones to form blended rates. It means adding the current mortgage rates with the latest market rates on the new loan you borrow. Blend and extend rates are usually higher than other mortgage types. However, it is good practice to compare offers from different lenders. You must also weigh them against possible profits you might get if you break your mortgage to ensure you do not spend more money instead of saving.

Mortgage on Your Toronto Home

You must compare the penalty costs of breaking the contract with the benefits obtained by so doing. The penalties on a variable rate mortgage are three months interest and on a fixed term mortgage it will be three months’ interest or the interest rate differential whichever is higher. The interest differential is more often than not the higher of the two. It is the difference between the current rate and the posted rate at the time of the mortgage.
Don’t let penalties put you off.
The consultants at Certified Mortgage Brokers Toronto can help you to calculate the savings and costs of changing. A change could save you a fortune.

Working With Us Means

We Will Take Care Of Following:


  • Legal Fees
  • Appraisal
  • CMHC/GE Capital Premium
  • PST
  • Title Insurance
  • Discharge Penalties

We Won’t Let You Pay Fees That You Can Avoid

There are both pros and cons of refinancing and costs related to the process. By working with us you will become familiar with all the information and feel good about making a decision. At Certified Mortgage Brokers you will not be tricked into paying fees that you can avoid.

We Create A Unique Plan That Reflects Your Conditions

We provide a vast variety of financing options so don’t hesitate to speak with us. Our expert staff will create a unique plan that reflects your situation. Let us know what you are interested in and we will make it happen.

Google Reviews

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Afton Jaskolski
2020-12-30

Getting a private mortgage was not easy to be honest, but at least with Mr. Leon it was doable. Thank you for your help!

Davin Mills
2020-12-26

There are a lot of mortgage brokers in toronto to choose from, I was a bit intimidated by that. Don't regret I picked CMB, they took the lead and made sure to cover all the bases

Tracy Wilhoite
2020-11-21

I was renting an apartment for a long time and finally decided to take a big step - get a mortgage instead. Team at certified Mortgage Brokers laid out various options for me. The actual process went smooth and quick, happy with my new home.

Ryder Turcotte
2020-11-16

My wife and I decided to refinance our mortgage and started looking for a mortgage broker in Toronto. There were so many options, so you can imagine how overwhelmed we got! After talking to Leon we decided to proceed with Certified, didn't regret that decision once. They always gave useful recommendations, were attentive, and constantly in touch. And most importantly (for us) they helped us to save some money!!

Lucy Zimmerman
2020-11-11

Vita was great. Helped my son with all the paperwork and got him very good interest rate. On the closing date called to follow up if everything went fine. Quite a pleasant experience. I would recommend this firm for anyone who is looking a mortgage broker.

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