Your home is likely the most valuable asset in your portfolio. A refinance can help you put your financial house in order by using the equity your home has accumulated through market appreciation and by simply paying down your mortgage.
A refinance usually includes increasing the amount of the mortgage loan secured by the property. This lets you gain access to additional cash at the lowest possible rates with very low required payments.
A home can be refinanced up 90% of its value through most lenders. You can borrow up to 100% of your home’s value through alternative lender channels but the rates tend to be higher when you do so.
A few refinancing strategies that RateMiser clients often use:
Pay Off Higher Interest Rate Debts
Refinancing can reduce your monthly debt service by reducing the interest rate you are paying and stretching out your repayment time. This can bring tremendous relief -particularly if you can avoid accumulating new high interest debts in the future. The best way to break the debt cycle is to start automatic savings and/or investment programs at the time of your refinance to save for future large purchases.
Invest in Home Renovations
Well-chosen home renovations can improve your life now and in the future. When the renovations are done, you get to live in a nicer house, and you’ve increased the value of your home. You will likely get your money back and more when you sell or refinance your house.
If you are contemplating renovations, consider ordering an EnerGuide for Houses Home Energy audit in advance, and include some energy efficiency improvements in your plan. You will save on heating bills, and may be eligible for a rebate grant from the government. Your RateMiser Mortgage Advisor can show you how.
Fund Your Financial Plans
A refinance can free up access to cash to help you catch up on unused RRSP and RESP contributions or other investment opportunities. You can also deduct all or part of the interest on any portion of your new mortgage that is used for investment purposes outside the RRSPs. Your RateMiser Mortgage Advisor and tax accountant can give you the details.