What will it cost to refinance my mortgage?
The biggest one is probably the payout penalty from your existing lender. This amount can be added to your new mortgage amount, or you can pay it out of pocket. The other costs associated with arranging the new mortgage are; legal fees to have the paperwork changed and an appraisal fee to confirm the value of your property. The legal fees can be deducted from your refinance proceeds, but the appraisal cost will likely have to come out of pocket.
Estimate of costs:
- Legal fees - $390- $600
- Appraisal fee - $225- $350
- Admin or discharge fees from existing lender - $250
How much of my house value can I borrow?
In Canada, the highest you can borrow up to is 95% of your house value. Keep in mind, anytime you borrow more than 80% of the value, you will have to pay an insurance premium. There is a little trick to how much high ratio insurance you will have to pay. If your mortgage was originally insured, you might not have to pay a premium on those already insured funds (some conditions apply). For example, Blake bought his home in 2001 and he had an original mortgage amount of $200,000. He has paid his mortgage down to $100,000 but now he needs another $150,000. He may only have to pay an insurance premium on the new funds of $50,000 as the amount of $200,000 has already been insured. This is only the case if your new mortgage is insured
Being smart with your money just makes sense. Quickfire Mortgage Soluntions trusted Mortgage Advisors will help you decide whether it is the right time for you to refinance. The decision to refinance should be carefully evaluated to avoid any complications at a later stage. By carefully studying the status of your current mortgage and comparing it to your income and other debts, we help you pick the refinance solution that best suits your current financial needs.
There are many reasons why you might be thinking of refinancing your mortgage.
- Help obtain a lower fixed rate : The interest on a fixed rate mortgage that you took several years ago may have dropped drastically. Refinancing the existing mortgage will entitle you to a reduced interest rate. This can save you money and increase your monthly cash flow.
- Investments : You can refinance your existing mortgage and use these funds to purchase an investment. This can be an excellent vehicle for your mortgage interest to be tax deductible in certain circumstances.
- Convert an Adjustable Rate Mortgage into a Fixed Rate Mortgage : The interest rates on an adjustable rate mortgage (ARM) might be low initially, but the fluctuations are unpredictable. Some people find these constant variations in the interest rate concerning and prefer to refinance the mortgage into a secure fixed rate.
- Consolidating multiple mortgages into one : Making your finances simple and easy to budget is important for most individuals. The best solution in this case is to consolidate multiple mortgages into one, with a fixed monthly interest rate and a longer repayment duration.
- Pay off other debts : The proceeds from your refinanced mortgage can be used to pay off credit card bills and other similar expenses. This potentially can end up saving a considerable amount of money and free up your cash flow.
- Make cash provisions for emergency situations : You can refinance your existing mortgage to free a larger amount of cash, depending on your home equity. Since a mortgage is a secured loan, the interest applied is considerably lower than that of an unsecured loan.
Quickfire Mortgage Solutions offers some of the lowest and most competitive mortgage refinance rates in the market. Regardless of your requirements, whether it is to consolidate existing mortgages or obtain a better rate, we get you the best deal possible. Our experienced Mortgage Advisors, who have extensive knowledge of the mortgage industry, will provide the necessary guidance that you need in making the right refinance decision.
Does it cost anything if I want to move my mortgage at the time of my renewal?
When you are switching lenders, there are 2 main costs. The legal fees to have all your paperwork changed to your new lender, and maybe an appraisal to confirm the value of your property. Your existing lender may charge some administration or discharge fees as well. That would be in the fine print of your mortgage commitment. In order for your mortgage to qualify as a switch/transfer, you must be switching dollar for dollar, and your amortization cannot change. Most of our lenders offer some kind of transfer or switch program where they will reimburse you for some of the costs involved with moving your mortgage to them. Some lenders will cover all costs, some lender offer up to $500 of costs, anything on top of that is out of pocket. The beauty of a straight switch/transfer is the paperwork is minimal, so sometimes a lawyer or an appraisal is not needed. It differs among lenders, sometimes the lender with the best rate will only cover up to $200, so be prepared with some cash on hand if you want to save in the long run.
What is the process if I want to add more money to my mortgage amount?
If you are adding money to your mortgage, or changing your amortization it is not a switch/transfer anymore; it is now considered a refinance. That means that the costs to cover the mortgage will not be paid for by the lender. You can look at having some of the costs deducted from your refinance proceeds, especially the legal fees.
An estimate of the costs your can expect are:
- Legal fees: $390- $600
- Appraisal cost: $225- $350
- Discharge/Admin fees from existing lender: $250
What kind of paperwork will I be asked for?
When you are switching your mortgage, you are moving to a new lender, this lender does not know anything about you. You will have to fully re-qualify with your new lender, so it’s the usual documentation.
- Income confirmation - what we ask for depends on your employment
- Property tax confirmation - via recent property tax assessment
- Existing mortgage confirmation - via recent renewal notice
- Confirmation of any other debts - ie, other properties owned, we would request some supporting documentation.
Bottom line is you are moving to a new lender and they want to make sure you can qualify for your mortgage. That is in the best interest of the borrower and the lender.
How long does it take to have the new mortgage arranged?
When your mortgage is up for renewal, there is a specific date that you have to have financing lined up by. Your existing lender is saying that by this date “you are required to pay us out or you must renew into a new term with us”.
To arrange your new mortgage, we like to have about 3 weeks, just to be safe. But 2 weeks is also possible. If your renewal date is really close and you still want to switch your mortgage to a new lender, you can renew your existing mortgage into an OPEN term. What that does is it buys you some time to find new financing, and then when you payout your existing mortgage there is no payout penalty because it is an open term.
If you are thinking of making a move, speak to your mortgage professional today and get some sound advice that will save you money!