Mortgage Refinance

“A Toronto Home Mortgage Refinance Can Be Required For a Number Of Different Reasons”

Toronto Mortgage Brokers

A Home mortgage refinance is the process of paying out an existing mortgage with a new mortgage.

There can be several different reasons why this may be required, but here are the four most common categories:


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Mortgage Renewal: All home mortgages come with an interest rate term where the rate, either fixed or variable, is defined for a period of time or term. At the end of the mortgage term, whether we’re talking about uninsured or insured mortgages, the existing residential home mortgage will need to be renewed whereby the borrowers sign up for an new interest term, or the mortgage will need to be paid out from another source of funds. When an interest term is about to expire, the mortgage holders have to look at their available options and decide what the best go forward decision would be with respect to their mortgage requirements.

It may make economic sense to leave a particular mortgage lender in favor of someone who can offer you a better rate at the time of the expiry of your interest term. Assuming your existing mortgage holder is prepared to offer you a renewal, you may choose to stay right where you’re at and continue on with the existing mortgage lender.

Debt Consolidation: One of the most common forms of debt consolidation loan is to utilize the existing equity in your home to gain access to additional funds for paying down more expensive short term credit that may also be hard to cash flow on a monthly basis. In order to get a greater home equity loan against your property, a mortgage refinancing process can be conducted to payout your existing mortgage in favor of a new mortgage written at a higher amount.

Depending on your individual situation, there are different potential strategies for debt consolidation loans via with mortgage financing. In many cases a straight mortgage refinancing of the existing mortgage or mortgages registered against the property is the most cost effective approach to take. The best way to determine the best course of action is to work through all the different options that are available to you.

Interest Rate Improvement: When interest rates drop or are threatening to rise and stay up, a mortgage refinance may be the best strategy to either secure a lower interest rate or lock in the current market rates for a longer period of time. The challenge with interest rate improvement is to understand the net cost benefit for any potential mortgage refinancing action you may take. Refinancing an existing residential home mortgage with a fixed interest rate term can generate significant interest rate prepayment penalties that may make refinancing impractical.

However, at the same time, some mortgage companies will allow you to cost average your existing mortgage rate with a future rate, provided that you remain with them and sign up for a longer interest rate term. Once again, depending on your situation, there can be many different options or strategies to take. Understanding all relevant options and accurately doing the math to figure out which one is best for you is key to making a good decision.

Construction Mortgage Take Out: A construction project that is financed will likely have a bank or private mortgage charge against the project. The mortgage can also be in first, second, or third position. At the end of the construction work, the short term construction mortgage needs to be paid out in favor of a longer term home mortgage.

The construction take out mortgage effectively pays out any and all existing mortgages registered against the property into a new mortgage once again completing a mortgage refinancing process.

Regardless of you situation or needs, the key to a successful home mortgage refinance where you’re extracting the most economic benefit in the process is to work with an experienced mortgage specialist who can identify what options area available to you and guide you through the assessment process in order to determine which options provide the most net benefit to you over time.

If you’re in need of a home mortgage refinance, or want to know more about the process for refinancing a mortgage, we suggest that you give us a call so we can quickly assess your situation, provide relevant options for your consideration, and work through each scenario with you so your in a position to make the best decision in the time you have to work with.

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