Refinancing/Switching/Transferring Your Mortgage
With housing prices increasing and mortgage rates dropping to record lows, right now may be the best time to change your mortgage.
HOW MUCH CAN I GET WITH A REFINANCE?
Current mortgage rules allow a maximum amount of up to 80% of the appraised value to be available for a refinance. If you qualify, the rates will not be the advertised rates that you see from major lenders. Typically, the rate for a refinance mortgage is about 0.3 – 0.4% higher than the advertised rates on a 5-year fixed term. You also have the option of getting an extended amortization of 30 years to help offset the higher monthly payments. The longer amortization may also help with having to qualify the payments at 2% over the interest rate you will pay (stress test). However, if you have been laid off due to COVID-19, or if you are currently deferring your existing mortgage payments, some lenders may not accept your income at this time. We do have a list of lenders that are still accepting income from clients that are on temporary COVID lay-offs.
WHAT IS A SWITCH/TRANSFER?
If you do not want or need to take any equity out of your home and you are just looking for a better rate with a different lender, then we can look at the option to Switch/Transfer your mortgage. In this case, we simply transfer your existing mortgage amount to a new lender that is offering a lower rate.
WHAT IS THE COST?
If you are refinancing/switching/transferring your first mortgage and it is not time to renew yet, there will probably be a penalty. The amount of the penalty will vary so your best option is to call your current lender and ask what the penalty would be to payout the current mortgage. The other possible costs with refinancing/switching/transferring the first mortgage is an appraisal (Cost around $350) and legal fees to discharge the current mortgage and register the new mortgage (Cost around $1200). There are many lenders who will cover the costs of a switch/transfer.
EVEN WITH A LARGE PENALTY AND COSTS, YOU MAY SAVE MORE WITH THE LOWER RATE
With rates dropping to the low 2% at this time, if you are currently paying over 3% on your current mortgage, the savings may be more than what the penalty would cost you. As always, each case is different.
If you would like to find out if you can save more money by refinancing your mortgage now, please contact me at 613-551-0639 or complete an online application at www.jmacdonald.ca.
I can compare all of your numbers and let you know if now is a good time to pull out some equity for a refinance or get a switch/transfer to a new lender at a lower rate.
Getting good advice from a Mortgage Broker is the best first step to make when you are considering different mortgage options… and our advice is FREE!
If you are interested in finding out more, I’d be happy to look at your mortgage options with you.
