Refinancing your mortgage is just like getting a new mortgage and you should take just as much care in the process. There are many reasons for refinancing including: debt consolidation, purchasing additional property, breaking an original term if there are cost savings, or accessing equity for making home renovations or other large purchases.
Equity take out mortgages are receiving a lot of attention these days. A large number of Canadians have realized that, after 15 or more years of home ownership, their mortgage balances are now very low or even paid off! This means their largest single asset may be a large amount of equity tied up in their home. While it’s nice to be “equity rich”, it’s also nice to have flexibility with where that money is invested.
Using your home equity may be the most cost efficient way to finance home renovations, purchase that dream boat, to use leverage for investment portfolios or top up your RRSP, or to purchase that cottage for the summer weekends. An equity Take-out could be a new mortgage or the refinancing of an existing mortgage, where your total mortgage amount increases.
The equity take out mortgage can be structure in 2 main ways:
- A standard fixed rate mortgage or
- A variable line of credit option.
The standard fixed rate mortgage provides stability in interest rates for the term of the mortgage (such as a 5 year mortgage term) but has restricted prepayment options
A variable line of credit option has a fluctuating interest rate which is usually based on the lenders. However, this type of financing is attractive because of very flexible repayment options.
Let us help guide you through this process by Contacting Us for more information today.