Why should I refinance, and what about the penalty?
Since houses in Canada tend to steadily grow in value, there is the option of pulling more equity at very low rates, and using it to reorganize, once priorities and financial life. For instance, renovation may be costly if it’s financed using an unsecured line of credit, or credit card’s debt. Using the mortgage for it while spreading it over the years makes sense as renovations is a long term expense. Same with pulling equity to act as a down payment to purchase your investment property.
Penalty is the biggest cost when it comes to refinance. This is why it’s so important to construct the first mortgage you’ll break down the road, so it will have the cheapest penalty option that can be even reduced furthermore. We specialize in getting you a mortgage that will allow the flexibility of refinance and will leverage your money to create your wealth.
There are amazing rates out there. Should I refinance with whoever gives me the best rate?
To you, the difference in rate of 0.1% or even 0.2% will translate over the course of 5 years to ~$2000-$3000 saved on a 500K mortgage. Saying that, a mortgage that is constructed to allow you further modification along the way, will save you 20-60K throughout the 5 year term. Yes, you heard right. There are much more influential features in your mortgage than a simple rate.
So why do we always focus on rates? Because banks would not want to prompt flexibility with the risk of losing you to their competitor. They draw your attention to rate comparison, knowing that the big money is not there. The big money is in taking the right mortgage in the first place, that will allow breaking it for a small cost, leave your current lender and save thousands of dollars by doing so.
Questions about mortgage refinance? We can help!
Can I get the first mortgage with my bank but do the refinance with you?smt-0079adminOf course you can, but it’s not as recommended, as your savings potential is laid out at the time you take your first mortgage. It will be more difficult and much more expensive to refinance a mortgage that has been constructed by the banks. We recommend doing the first step with an independent mortgage broker with the thought of breaking your mortgage within the first 2-3 years.
How do I know when it’s the right time to refinance my mortgage?smt-0079adminUsually you’ll hear in the news that there are great rates available to the borrowers. This is your cue to call us. We, on the other hand, run an ongoing algorithm to mine all of our clients that might benefit from refinancing their mortgage and we’ll call so if you are to save a significant amount AFTER paying your penalty. We are known across Canada because of this phone call. And of course, if a new financial need arises, it's a great reason to consider refinancing your mortgage.
If penalty is the obstacle to refinance, what is the difference between fixed rate mortgage to variable rate mortgage?smt-0079adminPenalty size would be the main criteria as to whether you’ll move out of your mortgage and refinance or stay with the current contract until your term is done and your mortgage is up for renewal. With a fixed rate mortgage your penalty may be 8 times (!) bigger than the variable rate mortgage. It’s a huge difference that may void all the advantages in refinancing. There are ways to lower your penalty. Again, its all about the way your initial mortgage has been structured.
Can I refinance whenever I choose to?smt-0079adminRefinancing midterm is your main tool to saving money. When refinancing, you have to take into consideration costs like penalty, legal fees, etc. We at Sneg Mortgage Team will call you whenever we think you may benefit from refinancing. Therefore we’ll do our best to avoid no-frills lenders or other restrictive mortgages that only let you refinance when you sell your property.
When I refinance, Can I include the cost in it?smt-0079adminYes. The lender will usually allow to add the penalty, appraisal and legal costs. Just keep in mind that the point of breaking the mortgage and paying a penalty is a fantastic time to reassess your needs and see what else we should include into one very very cheap loan.
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All it takes 1-2 minutes to send us your form. You can expect a response from us within 24 business hours. We’ll set up time for a quick phone conversation to determine how we can help you. Once we see we can get you the value you need, we will collect all information needed to immediately submit your file to specific lenders.
Our process begins with us collecting your supporting documents, things like ID’s, tax documents etc. We need these so that when we contact a lender on your behalf, they will not only approve you, but will also take the next step and confirm your income in order to offer you a fully guaranteed mortgage commitment. Giving us your documents upfront serves you in that we are able to perform a focused search among 40+ lenders and find you a tailored mortgage solution, the best mortgage rate and best mortgage terms.
A mortgage can be arranged within very short notice. Our record is set today at 11 hours from initial call to funding for a private mortgage, and 5 business days from the first call until the keys were in our client’s hands, for a conventional mortgage(!). Having said that, it is always better to take the needed time to properly lead a controlled and focused process. We are here with you along the way and long after you conclude it, as we constantly oversee the market to discover opportunities for our clients to cut costs.
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