Due to the global economic downturn that forced down the prime rates to their historically lowest value, mortgage rates have dropped considerably in recent few weeks, which has created an atmosphere to think about mortgage refinancing not even in Canada but throughout the world. The UK as a leading financial institution could not even save its strong financial footing to become part of this global issue.
Why Refinance Your Mortgage?
This historical lowest interest rate availability does not mostly affect any loan product with a smaller value and term but most of the borrowers find refinancing their mortgage is the best financing option to get saving on long-term liability, although this rewarding review will only be adopted by the small number of homeowners who will find considerable savings in relation to the incurred expenses lying with the process of refinancing. Mortgage Refinancing refers to paying off an existing mortgage and replacing it with a new one.
Obviously, the biggest reason to refinance your mortgage is to reduce your monthly mortgage payment. Following may be the most common reasons among borrowers who may adopt a mortgage refinance strategy:
- Lowering monthly payment to improve cash flow and savings (if you are refinancing at a lower interest rate, you will be charged less interest every month),
- Re-spreading out your loan over another number of years (depending on the term you choose),
- Setting up a home equity line of credit,
- Consolidating high-cost consumer debt, like car loans, student loans, credit cards or other personal loans,
- Improving home while taking advantage of the new federal home renovation tax credit.
Should I Break My mortgage For A Lower Rate?
Mortgage Refinancing is a strategic financial decision that requires the professional know-how of a mortgage expert to pick the best deal among various available options. A key element in evaluating any refinancing option is calculating the prepayment penalty that the mortgage usually requires to be paid by the borrower as a penalty in case if it is paid off the mortgage in full before the maturity date. The penalty is usually based on the remaining mortgage term and the difference between the mortgage rate being paid and the current rate of the mortgage being offered by the lender. Generally speaking, the shorter your remaining terms the smaller the penalty, and the longer the term left on your mortgage, the greater the prepayment penalties.
Moreover, if the Canadian Mortgage and Housing Corporation insure your mortgage, you pay a maximum penalty of three months interest after the third anniversary date of the interest adjustment period, or after the third-anniversary date from your most recent renewal.
Where To Find The Best Mortgage Refinancing Practical Assistance?
Obviously, if you decide to refinance, you are required to contact a mortgage expert, you may find it online and offline with great ease because a lot of ad campaigns are continuing highlighting this current demanding lower rates issue, shop around by calling several lending institutions to ask what interest and fees they charge. Remember, you don’t have to refinance your mortgage with the same lender that provided your original mortgage. Otherwise, you may check with the Better Business Bureau for the refinancing tips, which it has specially compiled to help you decide if refinancing is for you in the current financial situation along with a reliability report on lending institutions you’re considering.