Simple Guidance in Refinancing

Duncan Wilson

Lets take the complexity out of your EQUITY.

Many times people need access to their equity. This is called a refinance. You are changing the title to the home. A refinance is a change in the amount owed. You are paying off your existing mortgage and obtaining a new higher amount. 

Firstly, with this higher amount people can do many things:

  1. Payoff debt
  2. Renovate their home
  3. Put money in investments ( RRSP’s, TFSA, etc.)
  4. Provide down payments to loved ones for their home purchase
  5. Legal separation which involves division of assets

Secondly, this higher amount should:

  1. Generally lower your interest costs
  2. Increase value of home, or increase cash flow

To tell the truth, there are some cautions you want to avoid as well:

  1. Penalties
    1. I.R.D. – interest rate differential
    2. 3 months Interest –  Canada website on mortgage penalties

      2. Costs associated with doing the refinance 

    1. Lawyer costs 
    2. Lender costs (see b-lending)
    3. Brokerage costs possibly (see b-lending)
    4. Reinvestment Costs 

Furthermore, you want to make sure you have your income, and documents ready, and that’s where we come in. 

At Mortgage Suite we can make the refinance streamlined:

 

I also wanted to show you a quick glance at the refinance numbers below just to give you an idea of what it looks like to perform a refinance. This client had a small penalty, that we were able to reduce even lower by going back to the same company. Sometimes they reduce by 20%. We were lucky on this one. 

REFINANCE EXAMPLE
1st Mortgage Balance $ 185,000.00
Value of Property $ 640,000.00
LTV 80%
NEW MORTGAGE $ 512,000.00
Left over after paying mortgage $ 327,000.00
Lawyers Cost $ 800.00
Penalty $ 2,300.00
Discharge $ 450.00
Total $ 3,550.00
Total Left Over to you $ 323,450.00
TOTAL DEBT PAYOUTS
Bank Credit Card $ 14,000.00
Bank Loan $ 3,500.00
Other Credit Card $ 23,000.00
Line Of Credit $ 43,000.00
RSP Contribution to offset taxes $ 35,000.00
Renovations $ 130,000.00
Total Left Over to PAY (leave on LINE OF CREDIT) $ 74,950.00
Total Payment First RATE AT 1.84% $ 2,294.00
Property Taxes $ 491.67
Total Per month $ 2,785.67

Apply HERE to see what rate you qualify for 1.84%

Let Mortgage Suite help you refinance today!