Mortgage Refinancing and Equity Take-Outs
Whether you want to consolidate debt, take out equity for a project or need, shorten your amortization period, or simply secure a better rate, we have you covered.
Refinancing a mortgage means paying off an existing loan and replacing it with a new one. Below are a few reasons you might consider refinancing your Edmonton mortgage:
- Obtaining a lower interest rate
- Switching from an adjustable-rate mortgage (ARM) to a fixed rate mortgage (or vice versa)
- Consolidating debt into one low monthly payment
- Shortening the amortization of your mortgage
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Lowering your interest rate
Same amortization, lower payment! Reducing your interest rate saves you money and builds the equity in your home even quicker. For example a 5% rate on a 25-year amortization has a payment of $581.60 per $100,000. The same mortgage at 3% has a payment of $473.25, a savings of more than $100 a month!
Shorter amortization, similar payment! Refinancing your Edmonton mortgage at a lower interest rate not only saves you a ton of money but can significantly shorten how long you’ll be paying your mortgage, often without making a big impact on your monthly payment. For that 30-year fixed-rate mortgage on a $100,000 home, refinancing from 5% to 3% can let you cut the amortization to just under 19 years, with only a slight change in the monthly payment from $804.62 to $817.08. Contact Edmonton Mortgage Brokers to get started.
Switching to a new type of mortgage
Adjustable-rate mortgages (ARM) and fixed-rate mortgages both have their advantages depending on how the market is behaving. Fixed-rate mortgages keep their interest rates regardless what changes happen through the bank of Canada, whereas ARMs change with every adjustment in interest rates. For example, a fixed rate mortgage is advantageous when interest rates are on the rise and you want to lock in when rates are still low. But ARMs are better when interest rates take a down turn. No one wants to be locked in to a high interest rate when cheaper lower rates are available.
Currently, interest rates have been on the rise. Should you want to convert your mortgage to an ARM contact us to find out how!
There are many ways to handle debt, one of which being debt consolidation. This means trading in all your smaller loans for one larger one. In the case of refinancing, you add all your other debt to the total owing on your mortgage. Instead of making multiple payments to multiple lenders you only have to worry about making one payment: your mortgage. This single payment is often far smaller than the total of all the other payments you were making combined. To get started, Contact Edmonton Mortgage Brokers to save you time and money!
Home equity is the difference between the value of your home and the unpaid balance of your mortgage. For example, if your home is worth $550,000 and you owe $350,000 dollars on your mortgage, you’d have $200,000 in home equity. Your home equity goes up in two ways: 1) as you pay down your mortgage, and 2) if the value of your home increases.
Without selling your home, you can gain access to it’s equity by refinancing your mortgage. By refinancing you can access up to 80% of your home’s value minus any withstanding amount on your mortgage. For example, if you owe $300,000 on your home and the property is worth $450,000, refinancing could give you access to $60,000 in equity and leave you with a new mortgage balance of $360,000.
Reasons someone might want to take equity out of their home:
- Financing renovations to your home
- Borrowing to invest
- Financing a child’s education
- Funding a vacation
- Covering unexpected life expenses
Thinking about refinancing your home? Apply right now!
There are often fees associated with refinancing, so you should be sure to weigh the pros and cons in order to decide if refinancing is worth the cost. It should be said, however, that in many cases, the interest savings over time will more than make up for the payment of additional closing costs. Contact us today to find out exactly what refinancing costs may be involved with your mortgage specifically.
Current Mortgage Interest Rates