For most Canadian families, their house represents by far their largest and most secure investment, and financial planning experts strongly recommend that the sooner they can retire the mortgage on the home, the sooner families can lay the foundations for real wealth and its transmission from one generation to the next.  As you consider the benefits of refinancing your mortgage, start with the most fundamental questions: First, develop a clear answer for “What are the family’s financial goals?”  Then, ask and answer, “Will refinancing the mortgage help us achieve our financial goals?”  Consult a professional Financial Planner and an experienced Mortgage Agent for their opinions, advice, guidance, strategic and practical assistance.

The basics

Mortgage interest rates remain at historic lows, so you will probably not find a better time to refinance your mortgage.  As you refinance, you may negotiate completely new terms and conditions, using your experience and resources to bargain both for lower monthly payments and quicker retirement of the debt.  If your home has increased in value, you may also seize the opportunity to use your equity for major purchases, secondary school expenses, significant investments, or debt consolidation.  You may incur “payoff penalties” on your existing mortgage, but your long-term savings ought to dwarf the cancellation fees.  If those basic calculations do not work in your favor, then you naturally conclude that now is not the right time for refinancing.

Debt consolidation

If you have built-up substantial equity in your home but also have accumulated unsecured debts—credit cards, loans, or other lines of credit—refinancing may represent by far the best way to retire those debts, restore your good credit, and begin rebuilding your savings and investments.  Especially if you are carrying thousands of dollars in credit card debts and paying between 7% and 21% interest plus other fees and penalties, you can realize significant gains by using your home equity to pay off those obligations, because home loan interest rates are less than ¼ the credit card rates.

Major purchases or investments

If you are “a well-qualified buyer,” meaning that you have equity in your home and a respectable credit score, you have some leverage with mortgage lenders, and they will compete for your business, offering discounts, reduced fees, or other incentives.  You can afford to be a little bit coy with would-be lenders until you find the best rates, terms, and conditions.  Using your home equity to finance a major home improvement or purchase of a new vehicle will save you literally thousands of dollars over the life of your loan: compare up to 7-10% interest on auto loans against 3.89% interest on home mortgages.  You will realize similar savings if you use your home equity to finance your child’s university education.  With strategic planning and careful selection, you may also use your home equity for purchase of income properties or buy-and-hold stocks.  You accumulate wealth via the investments, and you gain a tax advantage from your interest payments.

Consult the professionals

Consult with a Mortgage Agent today to see which among these options best applies to you!  Find out how you can save thousands over the next few years.

Abraham Niyazi

Mortgage Agent

Lic#M08010640

Centum One Financial Corp

Lic#          10758

Cell:          416-993-4082

Toll Free: 1-866-728-3708

a.niyazi@easyrate.ca