Refinancing your home investment in British Columbia means that you are simply replacing your existing mortgage with a new mortgage on different terms. To find out if you qualify, your lender will calculate your “loan to value” ratio by dividing the balance owing on your mortgage and any other debts secured by your property into the current value of your property. If your “loan to value” ratio is 80% or under, you will most likely be approved. Similar to acquiring your first mortgage, the lender will also request to look at your monthly income and debts by requesting specific documents from you.
A few of the most common documents requested by lenders for refinancing are:
- Credit Bureau
- T4 Slips (2 years)
- Notice of Assessment (2 years, showing ZERO balance owing)
- Job Letter
- Most Recent Paystub
- Current Mortgage Statement (showing current mortgage balance)
- Recent Property Tax Bill
Across Canada, property values have jumped 34 percent since March of 2020. In B.C., locations outside of Vancouver saw the most increase, such as Chilliwack where assessments increased 36.5 percent in November, compared with 16 percent in Vancouver. With interest rates being at the “all-time low” and BC Home Assessments coming in at an “all-time high” it’s an interesting time to be on the market. This is where a refinance product can help you and your existing mortgage investment best.
A Refinance is needed whenever you need or want to make changes to your mortgage agreement, whether your mortgage is up for renewal or not. Some commonly made changes that require a refinance are:
- Increasing your mortgage amount to borrow money
- Changing your rate before the end of your term
- Changing the amortization period
There are several different solutions/steps to refinancing your mortgage. We have provided two below that include breaking your current mortgage contract early and taking out a home equity line of credit, with your current lender. Each solution /step comes with unique benefits and features.
Breaking your Existing Mortgage Contract early
- This option is most common when you are looking to get a lower interest rate or access the equity in your home. To summarize, you would be replacing your existing mortgage with a new mortgage on different terms, with a new lender.
Add a Home Equity Line of Credit (HELOC)
- This type of product is most common when you are looking to access the equity in your home investment with your current lender and/or a new lender. A HELOC will work in a way that is like a credit card, but because this loan is secured to your home, interest rates are much lower.
There are many benefits that come with refinancing your current mortgage. These benefits can allow you to easily do things you previously weren’t able to do… Such as: paying for a home renovation, consolidating your current debts, reinvesting by purchasing a rental property and overall freeing up cashflow for various reasons such as paying for your children’s schooling/activities, medical expenses, any unexpected large expenses, etc.
To summarize the purpose and benefit of a refinance…
- Potential to get a lower Interest Rate
- Potential to Consolidate Debt and Reduce your Monthly Debt Payments
- Allows you to switch to a Fixed or Variable Rate
- Accessing the Equity in your Home for various reasons such as home renovations and/or future reinvestment such as purchasing an investment property.
In summary, you will need to make sure you factor in all the fees and costs before you take the next step in your refinancing journey. You will need to pay appraisal costs, legal fees, and possible pre-payment charges or penalties if you’re breaking your current mortgage early.
If any of the products mentioned sound like something you may be interested in, please reach out and one of our Senior Broker Partners would be more than happy to assess your unique situation and give you the best advice. At GLM Mortgage Group, we are with our clients for the entire journey. From the beginning, we can identify client needs, any possible roadblocks, and give a variety of tailored solutions.
In summary, you will need to make sure you factor in all the fees before you take the next step in your refinancing journey. You will need to pay appraisal costs, legal fees, and possible pre-payment charges or penalties if you’re breaking your current mortgage early. You will need to pay appraisal costs, legal fees, and possible pre-payment charges or pena
