Do you want to access some of the equity in your home? Perhaps your home has gone up quite a bit in value and you want to access some funds to make home improvements, investments or pay down some debt. Should you just contact your current Lender or seek the advice of a Mortgage Broker. Here are some questions to ask:
1. If I’m in the middle of my mortgage term, what pre-payment penalty might apply if I break the term and refinance?
2. What rate will I be offered and how does that compare to my current interest rate? The government has made many changes to mortgage rules lately that make a refinance rate higher than a purchase rate.
3. What will my amortization be?
4. What fees will apply? Often in a refinance, legal fees, appraisal and a pre-payment penalty may apply to your transaction. It’s important to look at all options.
5. It’s always an option to switch to another Lender to get a better interest rate and a Broker can help you do this and often save you thousands in interest. Please be aware that you do need to qualify with this new Lender and this entails a new mortgage application, credit check, income documents and if you need new funds an appraisal is likely.
6. What are your plans for the next 5 years? Are you planning on selling your home, do you anticipate a move to another area or Province? All of these factors will determine what new term and type of product you should accept when accessing the equity in your home.