Refinancing your mortgage is a great tool not only to potentially decrease your monthly payment. Another benefit of refinancing is equity take-out.
Overall, refinancing means that you would like to change one of the mortgage conditions, usually it’s changing how much money you are taking out (sometimes referred to as “taking out equity”) or changing the amortization period.
Usually, people refinance their mortgage when their term is coming to an end. Some people choose to refinance earlier (or “break” current mortgage), but this can come with financial penalties from the lender, so talk to your mortgage agent before making a decision.
If your property has appreciated in value, during refinancing you might have an opportunity to take out more money than what your current mortgage is. For example, let’s assume that 5 years ago you bought a condo for 400k and your mortgage at the time was 320k. Now, 5 years later your condo is worth a lot more than before, maybe even 600k. In that case at refinance instead of just keeping your mortgage you can increase it for example to 400k.
The benefit for you is you can consolidate your debt (line of credit, credit cards, lease etc.) as mortgage usually has lower interest rate than other credit products. Or you can use this money to invest in other properties, renovation, opening a business – opportunities are endless!
Each situation is unique and there are many mortgage refinancing products that fit different people. Book a free consultation with me today and let’s talk about your refinancing your mortgage!
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