Refinancing your mortgage can be a great option for homeowners who are looking to access cash from their home equity, consolidate debt, or to get out of a mortgage contract that they are unhappy with. To determine whether refinancing your mortgage is the right move for you, you should consult with a professional mortgage broker who can assess your situation and make a recommendation.
What does it mean to refinance your mortgage?
When you refinance your mortgage, it means that you will be breaking your current mortgage and replacing it with a new one. Your new mortgage could be for the same balance as your current mortgage – or if you are looking to access some of your home equity, it will be for the balance of your current mortgage plus the amount of money you wish to borrow from your home equity.
In most cases, you will be able to borrow up to 80% of your home equity if you wish.
Why should you consider refinancing your mortgage?
There are various reasons why a homeowner may choose to refinance their mortgage. We have already discussed that it is a way to borrow cash from your home equity. You may wish to borrow this cash in order to consolidate higher interest consumer debt or to finance a large project such as a home improvement.
You may also wish to refinance your mortgage in order to get out of a mortgage that is no longer serving you. In other words, refinancing can be a good option if you are able to get a mortgage with a better interest rate or if for some reason you are no longer happy with your current lender.
Are there drawback to refinancing my mortgage?
Although refinancing your mortgage can be a powerful financial strategy, it is not the right choice for everyone.
When you break your current mortgage, there is going to be a financing penalty that you will have to pay. The amount of this penalty is usually lower the closer you are to your mortgage renewal date. In order to determine if a mortgage refinance is the right strategy for you, you will need to work with a mortgage broker who can calculate whether the amount of money you stand to save through a mortgage refinance is greater than the amount that you will have to pay for the penalty.
Can I still refinance my mortgage if I have bad credit?
In most cases, yes. You may however have to work with your mortgage broker in order to find a specialty lender who works specifically with bad credit mortgages. These lenders will look at factors other than your credit score – such as your repayment history and the value of your home – in order to make their decision concerning approval.
Contact Akal Mortgages today
If you think that refinancing your mortgage might be the right option for you, we are here to help. Contact us today to speak with one of our brokers.