1. To negotiate a lower interest rate on their mortgage
2. To consolidate debt
3. To finance big ticket purchases like home renovations, children's education and expensive home furnishings/appliances, just to name a new.
The reason that home mortgage refinancing in Ontario has become so popular is because consolidating debt and big ticket purchases is much cheaper when leveraging home equity. A mortgage or home equity loan is much less interest than credit cards, lines of credits and personal loans. There is also much more flexibility with monthly payments, and monthly payments are generally much lower.
Here are our top 3 mortgage financing tips if you are thinking of applying for home equity refinancing in Ontario.
Mortgage financing tip #1 – Establish a relationship with a local Mortgage Broker. This will increase your borrowing power and ensure that you obtain a competitive deal on your new mortgage. Mortgage Brokers in Ontario arrange mortgages through all the major banks, plus they have access to alternate funding sources like trust companies, credit unions, mortgage investment corporations and private lenders.
Often times when your bank won't approve mortgage refinancing or won't offer you a better mortgage interest rate, a Mortgage Broker will be able to secure the financing. Also, when you go directly to your bank there is no competition. You will only be offered what they want to offer you and each time you apply for credit it results in another inquiry on your credit report, which can impact your credit score. A Mortgage Broker will request your credit report in a single instance and use the credit report to shop your deal around.
Mortgage refinancing tip #2 – Check your credit report before looking for financing. Request your credit report to ensure that there is nothing improperly reported and so that you know your credit score before looking for a mortgage. Your bank will generally approve credit based on your credit score. The lower it is, the higher the interest rate they may offer you. Sometimes it pays to see and work on having a good credit score before looking for mortgage refinancing in Ontario. Generally in Ontario a 680 beacon score is considered good.
Mortgage refinancing tip #3 – Use an online mortgage calculator to compare mortgage payments based on different amortizations. By default, most banks will quote your new mortgage repayment based on a 25 or 30 year amortization. This is no way to get your house paid off quickly and will mean that you end up paying more interest in the long run. Shaving years off of your amortization often results in very little increase to your mortgage payment.
All in all mortgage refinancing could result in you getting the most competitive deal, so it is important to do your research and be prepared for when that time comes you are ready! For more information about mortgage refinancing in Ontario and our mortgage financing tips please contact Paul Mangion at GTA Mortgage Matters by calling 416-204-0156 or visit www.gtamortgagematters.com.