Refinances

Why refinance your house?

If you have been paying off your mortgage for a few years or more, then you likely have some equity built up in your home depending on what’s happening in the real estate market. The most common reasons why someone may want to access equity in their home are:

Renovations to your home

Have you had your eye on a kitchen or ensuite upgrade? Or perhaps you would like to suite out your basement and bring in some income potential? Pulling out equity to make improvements on your home is a great idea as it can bring even more value to your home if done correctly.

Paying out existing debt

Feeling stretched thin due to high interest credit card debt or car payments? Using the equity in your home to consolidate your debt into one easy monthly payment can be a great way to get your budget under control.

Paying for children’s schooling

If you weren’t in a position to put away for your child’s education while they grew up but have a good lump of equity in your home, it can be a great way to help them out with their post-secondary studies.

Purchasing a second property or rental home

Dreaming of a beach home or ski chalet? Perhaps you would like to start your real estate empire? Accessing the equity in your home to put towards a down payment on another home is an excellent way to add more real estate to your investment portfolio.

There are plenty of great reasons to refinance your home and accessing your equity can help you out in the long run. If you’re wondering which route best suites you, let’s sit down for an appointment and see how we can make your equity work for you!

What does refinance mean?

To refinance your house means to replace the mortgage you have with a new mortgage that has more favorable terms to your situation. Refinancing can allow a borrower to get better interest rates, shorten their term, create more manageable payments, access equity in the home, etc.

How to take equity out of home?

Home equity is the difference between the value of your home and how much you owe on your mortgage. If your home is worth $650,000.00 and you owe $400,000.00 on your mortgage you have $250,000.00 in equity. Your home equity can go up in two ways:

1. As you pay down your mortgage
2. If the value of your home increases

The rules for refinancing are that you can borrow up to 80% of the value of your home. So if youre house is worth $650,000 you can refinance up to $520,000. If you subtract how much you owe on your current mortgage of $400,000 that means you will be able to pull out $120,000 if you like. Your old mortgage will be replaced with a mortgage amount of $520,000 and $120,000 cash will go into your bank account. When you refinance you follow very similar steps to the ones you took when you initially secured your home loan. The process can take anywhere from 3-6 weeks and is really dependent on how quickly we can secure your paperwork and have the lender sign off on it. Let’s take a look at the steps in depth:

Complete a loan application

To complete your application you can come to my office or we can have a phone appointment. During this I will gather your personal details, employment information, current address, and mortgage balance. Once I have all of your information, I will be better able to access your needs and see how we can set you up for success. This will also provide me with the details I need to shop around to set you up with a lender that best suits your needs.

Gather your documents

Depending on your circumstances the documents required may vary. This is something I will go over with you on a case-by-case basis but most common documents required are:

• 2 years T4’s
• Recent Paystub
• Letter of Employment
• For self-employed individuals: I will need 2 years T1’s and NOA’s
• Property Tax Statement & Proof it has been paid
• Current Mortgage statement
• Copy of ID

Get an appraisal done on your home

This is typically around $350+ and they will value your home based on the current real estate market. This gives the lender confirmation that you have enough equity in the home for them to lend on.

Underwriting

During this stage of the loan process, we are waiting for the lender to sign off on all the documents you have provided me. This can take anywhere from 1-7 business days depending on the lenders current work capacity.

Signing the Mortgage Documents

This step can be done in office with me or I can send you everything electronically. Whichever fits your schedule best! Once we have the documents signed, all I will need is your lawyer’s information to complete everything on my end.

Signing with your lawyer

Once we have everything completely at my office, your lawyer will contact you to sign the documents with them. This is where they can register the mortgage onto your title and ensure everything is all tied up.

Taking equity out of your home can be an easy, stress-free process when you have an experienced professional guiding you along the way.

Can you take equity out of your home to buy another?

Yes refinancing your current home to purchase another is a great way to start adding properties to your portfolio without having to save up a down payment for another house.