Mortgage Refinance in Montreal involves taking out equity from your property. People refinance their mortgages for a myriad of reasons. Depending on the reason for refinancing a mortgage, it can be a good thing, and it can also be a bad idea.
Why Refinance Your Mortgage
The following are some of the reasons why people refinance their mortgages:
Remove Equity From Their Home
Refinancing can give you up to 80 percent of your property’s value minus any unpaid mortgages. This extra cash can be used to rebuild or repair the house, renovate, send a child to college, and so on. The easiest way of doing this is by taking a home equity direct line of credit.
Profit From Low-interest Rates:
Even though there are penalties, but you can go ahead and break your mortgage contract for a lower rate. You will pay the penalty, but the benefits in the long term far outweigh the disadvantages.
A refinanced mortgage can help you pay off high-interest rate credits, provided you have a high equity in your home.
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Methods Of Refinancing A Mortgage
There are many approaches to refinancing a mortgage. They include:
- Adding a Home equity line of credit: Through a home equity line of credit, you can access the equity in your home as you like. Remember that you will need to pay interest each month on the remaining balance.
- Break your current mortgage contract early: Breaking your mortgage early means you cancel your existing mortgage and take a new one with any lender you desire. This can be done when you want to obtain lower mortgage rates, or you wish to access the equity in your property.
- Blend and extend your current mortgage: A blended rate is your existing mortgage added to other loans you borrowed at current market rates.
Cost Of Refinancing A Mortgage
You will need the services of a lawyer who will change the title of the financing, and you will pay penalties if you are breaking your mortgage early.
No matter the route you take, you still have to spend some money. A mortgage broker will advise you on the best action to take.
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Montreal Mortgage Frequently Asked Questions
What is a Mortgage Term?
The loan that you make to buy a house or some other property is called a mortgage. The principal refers to the amount borrowed. Each mortgage payment pays off part of the principal plus the interest.
You have custody over the property. However, if you fail to pay the loan and interest according to the terms of the contract, the lender may repossess the property.
What is a Down Payment?
A down payment refers to the money you pay for real estate property. This money is paid upfront and the rest of the cost of your new home is covered by your mortgage. For properties that cost up to $500,000, the minimum down payment in Canada is 5% – however, do take note that your lender may sometimes require a higher down payment.
But what if the cost of the property is more than $500,000? If that is the case then the interest is 5% for the first $500,000 and then 10% for the remainder of the cost.