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Mortgage Refinance Canada

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TermTypeRate
1 YearFixed Closed6.69%
2 YearFixed Closed6.04%
3 YearFixed Closed4.94%
4 YearFixed Closed5.04%
5 YearFixed Closed4.69%
Secured Line of CreditOpenPrime + .50%
5 Year (Prime 6.95% less 1.15%) VariableClosed5.80%

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If you’ve been paying off a mortgage for a few years, you have been building up equity in your home. This equity can be used for refinancing your mortgage for example consolidating debts into one lower mortgage payment. This can include various loans and most commonly credit card debt with very high interest rates. Refinance mortgages is still year after year, a very popular mortgage to get because of the thousands of dollars saved. Did you know that over 55% of mortgage holders break their 5 year term mortgage on average after 2 years into the term in order to refinance?
Mortgage refinancing allows you to renegotiate the terms of your mortgage, potentially getting a better interest rate and term. If you have good credit, this can be advantageous for changing to a fixed rate from a variable one, or lowering your interest rate.
There are many different aspects and regulations for refinancing your mortgage, which can make it difficult for you to decide what’s best for your situation. Luckily, mortgage brokers are available to help you figure out what you want to do.
Below are more details on refinancing your mortgage in Canada as well as information on the benefits of using a mortgage broker to help you seal the deal.

What Does Refinancing a Mortgage Mean?

Refinancing a mortgage means revising the terms of a mortgage agreement. A refinance is usually done to get a better interest rate, more reasonable payment terms, or other advantages.

There are many ways to refinance a mortgage, but all of them involve going through a lender to obtain a loan to replace their mortgage. Borrowers should be prepared to provide information on their credit score, existing debts, and income. Qualifying for a refinance is very similar to qualifying for the original mortgage, and being thorough and responsible can save you a lot of headache in the long run.

A good way to make the process easier is to go through a mortgage broker. Using a mortgage broker to refinance comes with a number of advantages:

Do You Need a Lawyer to Refinance Your Mortgage in Canada?

Since there are a lot of different laws and regulations dealing with mortgage refinancing, some borrowers may be tempted to consult a lawyer when seeking to refinance their mortgage. While consulting a lawyer can be informative, it can be expensive and unnecessary if you have another way to navigate the process.

You do not need a lawyer to refinance your mortgage in Canada. Lenders that offer mortgage refinancing will have their own legal teams for handling mortgage contracts. However, hiring your own lawyer or going through a mortgage broker can be a good idea to avoid scams and predatory contracts.

How Much Equity Do You Need to Refinance in Canada?

In Canada, the federal government regulates lending policies for the major Canadian banking institutions. If you want to refinance your mortgage through one of these banks, you will have to follow certain requirements. Private lenders, however, are not limited by such regulations.

You need 20% equity to refinance in Canada. There are also other requirements such as a stress test. These rules only apply to federally regulated institutions, and not to private lenders.

If you want to refinance your mortgage without 20% equity, you have a couple of options. You can continue to build equity until you are able to qualify; or you can seek refinancing through a private lender. However, it is important to keep in mind that private lenders aren’t as regulated as the major banks, and some of their loans can be predatory or fraudulent.
To avoid pitfalls when dealing with either federally regulated financial institutions or private lenders, it’s a good idea to work with a mortgage broker when seeking to refinance your mortgage.

Final Thoughts

Refinancing your mortgage can be a good way to lower your interest rates or end up with a better term on your mortgage. However, it can be risky navigating the world of mortgage refinancing if you are not experienced, or have bad credit.
Using a mortgage broker will save you a lot of time and effort finding the best lenders. They may also give you better access to lending services, or identify predatory payment terms in confusing mortgage contracts.

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Karen Parrot
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