This is the time of year
where people typically take a look at their financial situation and make goals
for the upcoming year. Whether it be to do renovations, pay off outstanding
debt, invest or whatever else you choose, there are a few things to know about
refinancing in Canada.
You can only borrow up to a total of 80% of the
value of your property.
·
It is important to note that
most lenders will want to see a recent appraisal for the property. This is
typically an upfront cost as the lender needs to know what the current value is
before they can determine the maximum mortgage amount. BC Assessments are
typically not used as they may not
be a true reflection of the market value.
The maximum amortization you can have is 25
years regardless of your current amortization.
·
If your current amortization
was set at 30 years, your mortgage payments will be slightly lower. It is important
to keep this in mind both for qualifying and for your household budget as the
new mortgage will be at most 25 years and therefore your payments will
increase.
You will need to know the payout penalty for
your existing mortgage.
·
This is a very important
factor, especially if you are refinancing in order to get a lower rate or to
invest. Since all financial institutions have a slightly different payout
penalty calculation, it is important to get that information directly from your
current lender. For most variable rate mortgages, it will be the total of 3
month’s interest and for most fixed rate mortgages, it will be the greater of 3
month’s interest or Interest
Rate Differential. This information will allow your mortgage professional
to advise you on the best strategy for when/if to refinance.
Some lenders have discount services if you
refinance with them.
· Check with your lenders to see if they are willing to
cover part or all of the legal and/or appraisals for the new mortgage.http://www.christinebuemann.com
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