Ottawa Mortgage Refinance
If you are thinking of refinancing, odds are you have been through the mortgage process before when buying your house. Although there are many similarities to the process, it’s good to have a refresher on the process and to know some of the different steps involved when refinancing. Here is your guide to an Ottawa mortgage refinance.
Ottawa Mortgage Refinance
What is an Ottawa Mortgage Refinance?
When thinking about if you should refinance, it’s important to have a goal. This can be any goal such borrowing the equity available in your house to complete renovations or to consolidate debt.
Also, a goal can be to reduce your mortgage payment amount to improve your cash flow. An Ottawa mortgage refinance gives you the option to change your mortgage terms. For example, you can refinance for a longer amortization. Some lenders will allow 30 years or more. This can help lower your mortgage payment. Although it would take longer to pay off your mortgage you would see an improvement in your monthly cash flow. This extra cash on hand may help towards other financial obligations.
To decrease your amortization, most lenders allow you prepayment privileges to pay a substantial amount of your mortgage off within the term. With that, you would not need to refinance to lower your amortization.
Learn more: Prepayment, Porting and Assumable
Once you have chosen your goal, it will be easier to choose a term and payment amount that best fits your need. Contact a mortgage broker in Ottawa if you need help with establishing your goal and to set you up on the best plan moving forward.
Learn more: Mortgage Brokers in Ottawa
What Does it Cost for an Ottawa Mortgage Refinance?
The costs associated with an Ottawa mortgage refinance are also important to consider.
As you are typically breaking your mortgage contract and entering into a new contract your lender may have a penalty to do this. However, if staying with the same lender or making adjustments to the current mortgage the penalty may not be applicable or could be waived by your current lender. I can assist you with looking into this with your current lender.
Learn more: The Most Common Reasons People Break a Mortgage
Learn more: What is an Interest Rate Differential (IRD) and How is it Calculated?
In addition to the penalty to break your mortgage other fees that can arise are an appraisal and legal cost. The lender assisting with the refinance however may assist with these costs.
It’s important to determine if the cost to complete the refinance negatively outweighs the benefits of the refinance. For example, if looking to consolidate $10,000 in credit card debt into your mortgage, it may not be worth paying the costs associated with a refinance. For that, you may be better off consolidating the debt with a personal loan or line of credit.
Contact Me Today to Learn More About an Ottawa Mortgage Refinance
Do I Have Enough Equity Available to Refinance?
Most traditional lenders can refinance a home up to 80% of the appraised value.
By finding the approximate value of your house, this will help determine if it’s worth proceeding with an application. The best answer to find out, is if there is enough equity available in your property to refinance.
When it comes to an approximate value you can ask yourself what would I sell my house for today or what are the current prices of similar homes in my neighbourhood for sale. This will give you a good ballpark. Alternatively, you can call an Ottawa real estate agent and ask them for the approximate value. The fastest way to find the approximate value is to use the MOPOLO app.
Learn more: MOPOLO
From there you can take 80% of this value and minus your current mortgage balance outstanding. This amount will be the new funds available to borrow.
Some alternative and private lenders in Ottawa can go up to 85% loan to value which can help free up extra equity if needed.
Learn more: Private Mortgage
Learn more: Private Lender Mortgage Cheat-Sheet
Once you have your goal set and know there will be funds available to borrow with the refinance, the next step is to get started on an application. Also, to collect the documents a lender requires.
How Do I Apply For an Ottawa Mortgage Refinance?
For a mortgage refinance in Ottawa, the best place to start is with a refinance application. The application will look at information such as your:
- current mortgage details
The application itself only takes a few minutes and can be done online, face-to-face or over the phone.
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What Documents Are Required to Complete a Refinance?
In general a lender will need to know the details of your current mortgage and employment. Also they will need to confirm that you currently have fire insurance on the property and that your property taxes are up to date.
Typically the original copies of documents are not required. With that, having an electronic copy available to send when it’s time is perfect.
Learn more: Documents Required For a Refinance
Learn more: Important Documents to Have When Applying For a Mortgage
Does Mortgage Refinancing Affect Your Credit?
As an application needs to be completed this will require a credit check. A credit check however only uses a few points. If looking to consolidate debt or get you on the right track to avoid missing debt payments, then a refinance can help improve your credit score over time.
Learn more: How to Build Your Credit Score
Learn more: Equifax.ca
Does a Lender Need an Appraisal for an Ottawa Mortgage Refinance?
Once a lender has reviewed your application and supporting documents, if approved, then an appraisal is required.
How Long Does a Refinance Take?
If you know in advance that you will need to refinance it’s best not to wait till the last minute.
A refinance typically takes from start to finish about two weeks. This is due to the processes required within the refinance. For example, the application, lender review, documents review, appraisal and legal work