REFINANCE / RENEW
Refinancing can help reduce your payments and interest expense, and also can help you investment in your home or other assets. Renewing gets you a new a possibly better rate.
Restructuring or renewing your mortgage can have many advantages, from reducing your overall payments and interest expense to helping you make investment in your home or other appreciating assets. At The Mortgage Desk, we guide you through our quick and seamless process, ensuring a stress free and efficient transaction.
- This is a very common transaction that can both reduce your over all interest expense, but also improve your overall monthly cashflows
- Here we use mortgage funds to payout higher interest rate credit such as credit cards or student loans.
- The reason it improves your monthly cashflow is that in addition to reducing interest expense, mortgage payments are calculated over many more years than loans and credit cards
Equity Take Out
- This is another very common transaction where we are borrowing mortgage funds to pay for a large expense.
- Purpose could be for home renovations, purchasing investments, college tuitions, another property, and even leisure expense like travel or that dream car.
- Here again, since mortgages typically have low interest rate, you will save on interest vs other financing.
Renewals are extremely common as every home owner needs them. There are two types, and in both cases, you are not increasing your mortgage amount, but simply renegotiating interest rate with the same, or different, lender.
Early / Mid-Term Renewal
- An Early Renewal is when you are part way through a mortgage term and because current interest rates are lower than your current rate, it makes sense to break your mortgage early, and pay any break fee or penalty, as the interest saving are greater in the longer run.
- In some cases, The Mortgage Desk will help by covering part or all of the break fee.
Renewal at Maturity / End of Term
- The most common term or duration of a mortgage is 5 years (but they can be longer or shorter). At the end of the 5 years, you must renew your mortgage and current rates.
- You will get a renewal offer from your existing lender 3-6 months prior to your maturity date. These rates are often MUCH higher than what we can get for you, so be sure to call us before signing anything!
- Legal fees are not typically required for these transactions, and in most The Mortgage Desk will cover any fees associated with closing the transaction.
REFINANCE AND RENEWAL TERMS
Here Are Some Terms To Get To Know With Refinances And Renewals
- This is the term of your contract with the lender. The lender guarantees your rate over the full term.
- This is the end date of the Mortgage Term, and is when you will need to either renew with the current lender, or switch to a new lender and pay out the current lender.
- If you decide to restructure or transfer your mortgage to another lender before the Maturity Date (or end of the Mortgage Term), the current lender will charge you a penalty or break fee based on interest rates and how much time is left in the term.
- It is very important to fully understand these clauses, and we can help break it down.
- The lender will provide this document to layout the terms and condition that must be met prior to them funding your new mortgage.
- Some conditions include income and employment verification, proof of property taxes being paid on time, and appraisal.
- An appraisal is a formal report produced by a certified home appraiser for the primary purpose of determining the value of the home. Most lenders will require this to be completed on all transactions. In some cases, a computer-based valuation method may be okay, which can save you on costs.
- This is income from the property itself that helps you qualify for the mortgage. The most common and accepted form is basement or suite income from renters living in a portion of your home. All things being equal, you will qualify for a larger mortgage with a mortgage helper than without one.
- Once we have met all the loan condition of the lender that we choose together, you will need to arrange a signing appointment with a real estate lawyer, and we can help with this as well. The lawyer charges legal fees for two main reasons:
- To give you legal advice and ensure you understand the terms of your mortgage; and
- To register the lender’s charge on the land title (or deed of the property).
- There will also typically be a fee for title insurance, which lenders require to ensure their charge on title is unencumbered.