Paying out an existing mortgage by arranging a new one to take it’s place is considered to be a refinance. This can be done using the same Lender or a different Lender.

Reasons for a Refinance:

• Debt Consolidation can wrap all your monthly debts into one lower rate, lower payment amount.
• A decrease of mortgage payments can be achieved by refinancing and extending the Amortization. The maximum Amortization in Canada is now 35 years for purchase transactions. For those with 20% equity or more a 40 year Amortization is possible.
• Equity can be borrowed form the home to buy Investments to diversify your financial portfolio and take advantage of Stock Market conditions.
• Renovations actually increase the value and livability of your home.
• Quality insulation, a pool, updating interior finished all increase value and enjoyment.
• Some Homeowners use their existing equity as a down payment to buy a Recreational home or even a Rental for future investment and diversification of their portfolio
• There are times when it makes sense to buy high cost items and finance them at the very low rates that are offered through a mortgage.
• Special occasions are often high cost and can’t be financed in any other ways. Taking advantage of existing equity to pay for education costs for a child or assist in making a dream wedding or vacation possible is an option when the equity supports it.
• Refinance for the purpose of reducing a mortgage rate is the most important to assess before proceeding. It can carry a heavy penalty depending on the remaining number of months that the existing mortgage has and the difference in the interest rate it may or may not be cost effective.

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