Why Should I Refinance My Mortgage?

Mortgage refinancing can be very advantageous if you are looking to reduce your monthly mortgage payment, consolidate debt or pay off your mortgage faster. More and more Canadians are reducing their monthly expenses by either getting a mortgage refinance plan or a second mortgage if the current mortgage interest rate is lower than their existing mortgage rate.

Mortgage Refinance

Since the new mortgage rule change, there has been some difficulty in the marketplace for some borrowers to get a mortgage and a mortgage broker with many lending options to choose from. The mortgage broker may be an ideal partner to get the mortgage you may need to make improvements on your home, start investments, send children to university, or paying down debt to increase your credit so that you can get a lower mortgage rate.

There are many things to consider when refinancing your mortgage including getting the right mortgage advice could save you thousands of dollars. For example, consolidating $40,000 credit card debt could provide a significant savings. 

If you are thinking of refinancing, you will need to ask questions like:

  • Should I get a 30-year amortized mortgage and reduce my monthly mortgage payment?
  • Should I reduce my Amortization and payoff my mortgage faster?
  • Are there advantages to combining a first and second mortgage?
  • Would getting a second mortgage to pay my consumer proposal help my credit?
  • How much will I save if I refinance my mortgage early?

Can I refinance with no income?

Each mortgage borrower situation is different, so deciding on things like whether you should take a fixed rate mortgage or a variable rate mortgage will depend on your risk aversion to mortgage interest rate fluctuations, your budget and stability of income among other things.

With a fixed rate mortgage, your mortgage payments are fixed for a specific term with no chance of increasing during the term. With a variable rate mortgage or adjustable rate mortgage, rates and payment fluctuate with the mortgage lender’s prime rate.

Refinance mortgage rates are also higher than getting a new mortgage with less than 20% down payment. Mortgages with less than 20% down have to be insured by either Canada Mortgage and Housing Corporation CMHC, Canada Guaranty Mortgage Insurance, or Genworth Canada. Mortgage with more than 20% equity are not usually insured so they are considered a higher risk by lenders and come with a higher interest rate.

Can I Refinance My Mortgage If I Have Credit Issues?

Due to prior credit issues, some homeowner’s existing mortgage rate might be higher than current mortgage lending rates. Now might be the best time for them to lock into a current 5-year mortgage rate for extra security. Another option would be combining a first and second mortgage to lower their payments.

Others refinance because their current mortgage lender will not refinance their mortgage and thus have to seek an alternative mortgage lender for their home loan. If an alternative mortgage lender will not accept the borrower, they may have to get private mortgage financing.

It is always a good idea to get a second mortgage if you have a great rate with your current mortgage lender, you have debts that you want to pay out, and you want to reduce your monthly payments. You can then refinance the mortgage at the end of the mortgage term and reduce your interest rate.

You could also provide your information using our online mortgage application and we will use that information to compare current mortgage lending rates with one of our many mortgage lenders.

The best place to start is by visiting our online mortgage calculators. If you need help please send a message to us and one of our online mortgage brokers will contact you to devise a plan that best fits your unique situation.

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