Mortgage refinancing can be such a great option in Canada, as there’s the possibility of saving a considerable amount every year on your mortgage payments via one big payment each month if you play your cards right. Many homeowners take advantage of this opportunity once their mortgage terms are over and the opportunity to do so arises.
However, there are some important considerations you’ll have to make when thinking of refinancing your mortgage. It’s best to ask yourself and a mortgage service many questions to clarify how you should approach refinancing your mortgage.
Here are some key considerations to note for your mortgage refinancing.
1) Credit Score
Credit scores can make a huge difference in getting approval for mortgage refinances. If you have a low credit score, it will potentially be more difficult to get a mortgage refinancing deal that you’ll be happy with.
Lenders will study your credit report and history to see if you’re eligible for a mortgage refinance. Each lender will have their own ways of gauging and confirming an applicant’s eligibility. It’s best to determine what the ideal score is and work your way towards that.
2) Home Equity
If you have a lot of equity in your home, you are a more desirable candidate for a mortgage refinance deal. However, if your situation is the opposite, you should probably think of other ways to save money that’ll allow you to shoulder refinancing.
Some Canadian homeowners like to downsize their home or add a suite to it to increase their home equity. You can try to refinance the mortgage with another lender but take their potential approval into consideration.
3) Interest Rates
Interest rates play a large role in obtaining a mortgage refinance. Generally, the lower the rate, the better it is for you. If the rates are too high when you want to get into refinancing, then you should hold off or strike a bargain.
Remember that there will be multiple interest rates that you would need to assess. Your current payments, the new expenses you’ll be making, and how long it will take you to pay off your mortgage are all key factors when it comes to refinancing your mortgage.
4) Refinancing Rates
Speaking of rates, you’ll also want to soberly assess the refinancing rates. If you want to decrease your monthly payments, then you’ll need to assess if the prices are reasonable enough for you to handle.
Ultimately, the goal is to get a mortgage to refinance with a better rate than your current mortgage, and then you’ll save money on your final deal. Refinancing rates are often lower than your actual mortgage rates when dealing with the right lender.
5) Mortgage Options
There are plenty of mortgage options to choose from when it comes to refinancing. You’ll want to be especially careful and consider all of them, as there’s a lot that’s at stake – your money, your home, and your credit.
The main mortgage options to consider are breaking your mortgage into shorter terms or turning it into one big monthly payment. The latter is more common in mortgage refinancing, as it’s the best option to make one huge payment that saves you the most money.
If you’re thinking of refinancing your mortgage in Canada, then you should think of what you stand to gain and lose. By doing an assessment and discussion, you get to consider what would be the most beneficial for you.
Looking for the best refinance rates in Ottawa? Ottawa Mortgage Services provides mortgage agent services to residents and commercial clients who need refinancing, debt consolidation and more. Contact us today!