There are many reasons for refinancing mortgages in Ottawa,
Common Reasons for Refinancing Mortgages
Refinancing a mortgage involves taking out a new mortgage
that pays off the money still owing on your current mortgage. It can be for the
same amount at a different interest rate or for a higher amount than you
currently owe. People consider refinancing
their homes for many different reasons.
One reason is a drop in interest rates. Even with a decade
of low interest rates, there are fluctuations. If you find the rate suddenly
drops after you’re a year or two into your mortgage, there’s a chance that you
can refinance for that lower rate and save thousands over the life of your
mortgage. It’s important to discuss the move with a professional first though
since you may face a financial penalty for refinancing a mortgage. Even if
there is a fee, you may still come out ahead if you save more on interest than
you pay to refinance.
Refinancing the mortgage on your Ottawa home can also help
if you’re swimming in debt. If credit cards or a line of credit are needed to
make your monthly bills, lowering your mortgage payments can help prevent your
debt from increasing. Refinancing mortgages is a way to get longer amortization
periods. You’ll be able to repay your mortgage over a longer period of time,
possibly with a lower interest rate, so your payments will be lower. That will
free up the money you need each month for other bills and expenses.
When you obtain a longer mortgage or a lower interest rate
that decreases your monthly payments, consider keeping your payments the same
as before (if you can) or raising the amount you pay when your financial
situation improves. That way you’ll be paying more toward the principal,
shaving months—or even years—off of your repayment schedule. It’s a move that may
save you thousands in interest charges.
Accessing the Equity in Your Home
If you need a large amount of cash, refinancing your Ottawa
home’s mortgage can get you the money you need for renovations, a new car, or a
child’s university education.
Talk to a real estate professional to get an estimate of the
current market value of your home. Then, use a mortgage payment
calculator to see how much money you may qualify for. Enter the amount
you’re interested in mortgaging on your Ottawa home, as well as the current
interest rates and amortization periods. This can show you how much your
monthly payments will be on a larger mortgage.
You can use that money for personal investments, expensive
home repairs that you’ve been putting off, a new roof, a vacation property, or
even renovations and updates that will raise the value of your home. The money
goes straight to you. The advantage of refinancing your mortgage over a
personal loan is that the interest rate is often much lower on a mortgage and
you can spread the payment over a number of years.
Refinancing your Ottawa mortgage can help you consolidate
debt, lower your monthly mortgage payments, afford a vacation property, or
indulge in luxuries like trips with your children and grandchildren.