Many Canadians remortgage their home as a way to reduce their monthly payments, pay off their debts or to reduce the interest rate and term of their current mortgage. Basically, remortgaging your property means breaking your old contract and putting in place a new one, often by switching the mortgage from the current lender to another one. The new lender pays out the amount owing on the original mortgage and registers a new one, with the property being used as security.
As mentioned, the main reasons for doing this are to obtain a less-expensive mortgage, release equity in the home to pay off other debts or home improvements, or to shorten the term of the mortgage and pay it off quicker. Remortgaging is also commonly referred to as refinancing, but it doesn’t mean taking out a second mortgage.
How The Remortgage Process Works
Most homeowners start to prepare for a remortgage several months before their current one ends. In this case, it is called a renewal. At this stage, you should find out how much it will cost to change lenders. The best way to do this is to contact the lender directly and enquire about any penalties, early repayment charges and fees etc. If there is an exit or discharge fee, be sure to check and see it’s the same amount as quoted on your mortgage. Before breaking your present deal, you should have a new mortgage in place which suits your needs. It’s often a good idea to use a professional broker such as MortgageMeister.com for assistance at this point. The broker will be able to help find the best deal for your specific situation and will be able to explain any fees involved. In some cases, the fees may be added to the loan amount, if there are any at all.
Once you know the exact cost of moving the mortgage, you will be able to decide whether it’s worth it or not. If the new deal doesn’t have any fees and if the current mortgage doesn’t have any penalties, then the choice should be easy. But before changing lenders, you should consider asking your current lender if they’re willing to match your new mortgage with the same rate and terms. If they are, it may save quite a bit of time and energy by staying with them. If they’re not willing to match the new mortgage, you will then have to apply for the mortgage with the new lender. If you leave a three-month window while doing this you’ll still have time to look elsewhere if they turn you down.
If the new lender is happy with your personal financial situation and details, a survey has been done and any fees have been paid, the new lender will send you an offer and will then deal directly with your current mortgage provider. A completion statement will then be sent to you in approximately a month. Once again, it’s highly recommended that you consult a mortgage professional before remortgaging your home to make sure it’s not costing you more than you think or more than your current deal. The broker will be able to compare your present mortgage with others that are available to make sure the benefits outweigh the costs.
It’s important to remember that the goal of remortgaging a home is to place you and your family in a better financial position than you’re currently in. At MortgageMeister.com, we’ll be able to help you look over all of your options and assist you in making the right choice. Please feel free to contact us with your mortgage related questions.