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:
- A broker can save you time and effort finding the best lenders available
- A broker can give you access to resources and lenders that you may not have been able to use without them
- A broker can identify predatory payment terms or other nasty things hiding in complex mortgage contracts
- A broker can help you reduce or waive some of the fees associated with refinancing your mortgage
Do You Need a Lawyer to Refinance Your Mortgage in Canada?
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?
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.
