If you are going through the refinancing process of your mortgage for the very first time then you may feel overwhelmed or confused. You may have heard different opinions or suggestions from different experts in the field, or even from your own family members or co-workers. Here, we will help debunk some of the most common myths about the mortgage refinancing process in Canada, so that you will be better prepared to handle the refinancing process yourself when the time comes.
Myth One: You Will Require 20% Equity in Order to Qualify
This is simply not true. While you may need to pay extra in the form of mortgage insurance if you are unable to put down 20% equity, you can still qualify for refinancing. In fact, even if you need to pay mortgage insurance to qualify, refinancing may still be a superb option, as it may save you more money in the long term.
Myth Two: You Will Barely Save Anything By Turning to Refinancing
In reality, refinancing can actually save you a large sum on your interest payments, depending on what rates are currently available on the market as well as the current interest rate on your home loan. To illustrate, a seemingly insignificant 1/7th of a percentage drop on your monthly rate can end up saving you several thousand dollars over the lifespan of the loan.
Myth Three: The Only Reason to Refinance is to Try and Get a Better Interest Rate
While getting a lower interest rate is one of the advantages of refinancing, it is not the be all end all. For instance, some Canadians refinance because they have built up a large amount of equity on their domicile and desire to withdraw some money in order to consolidate on some of their other debts with high interest rates, or would like to invest the money in some home renovations.
In other cases, a homeowner may want to refinance their homes in order to get a new, shorter loan term, which may allow them to save on interest payments, as they will be able to pay off their mortgage faster.
Myth Four: You Will Receive the Best Rates From Your Current Loan Provider
If you speak to a representative from your loan firm then will likely tell you that they will provide you with the best rate on the market. However, that may not be the case, so we would encourage that you take the time to shop around to see if there is a better offer on the table.
Then, if you happen to find one, bring it to the attention of your current lender, and if they fail to match or beat it then it may be time to switch providers. If you would like to avail yourself of the services of the Northwood Mortgage™ Financial Centre, or would just like more information, then please visit our website or call us at 888-492-3690 for a free, no obligation consultation.