Mortgage Refinancing in Ottawa

Refinancing replaces your current mortgage with a new one, so you can lower your rate, consolidate debt or borrow against the equity you’ve built in your Ottawa home.

Are you getting the best deal on your interest rate? Do you need cash to pay off credit cards or other debt? With access to over 30 lenders, our Ottawa mortgage advisors can help you work out whether breaking your current mortgage makes sense and calculate how much of your home equity you can use.

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Why Refinance a Mortgage?header decoration

Refinancing is an option that takes your current mortgage, whether mid-term (with a penalty) or at renewal (no penalty), and allows you to access equity to borrow additional money. This also creates a new term for the mortgage. Check if you can refinance by using our Mortgage Calculator.

Here are just a few reasons why refinancing your existing mortgage can make sense, depending on your situation:

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Lower Your Interest Rate

Ever hear of rate-and-term refinancing? This is the process of setting up a refinancing plan for your existing mortgage balance, but with an interest rate that is lower than before. The key here is to refinance your mortgage for as little as possible – the bigger the difference, the more you will save in the form of lower monthly fees. This can add up exponentially over time.

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Need to Make a Purchase? Use Your Home Equity

Your home equity has more power than many may realize. Refinancing with the help of a Mortgage Advisor – therefore getting the lowest interest rates possible – makes it possible to access most of the property’s appraised value. This is useful for everything from real estate investments to funding renovations, the latter of which will help to drive up your equity even further in the long run.

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Consolidating Debt

Did you know that your home equity can also be used to pay off outstanding debts? This can be useful if the interest for a refinanced mortgage is lower than that of your established line of credit, credit card bills or otherwise. Refinancing to consolidate debt is an ideal way to reduce long-term interest accruement, and we at the Mortgage Advisors are happy to help you identify whether the value of your home would sufficiently translate to such savings.

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Backing Out of Your Existing Mortgage

We can help you ascertain whether it’s more feasible to prematurely end your existing mortgage contract. This grants you the ability to shop around for more modern-day, competitive rates reflective of current market conditions. We’re happy to assist with finding an ideal lender and ensure the best possible value.

Creating a Home Equity Line of Credit

As noted, your property value can further justify refinancing. If it’s high enough, we can turn your home equity into a dedicated secure loan. Like any loan, you’ll accrue interest if you owe on it, but the rates will be considerably less than a conventional line of credit. Speak with us today to find out whether this is a possibility for you.

How Much Can You Borrow When You Refinance?

Most lenders let you borrow up to 80% of your home’s appraised value, minus what you still owe on your mortgage and any other loans secured against the home.

For example, if your Ottawa home appraises at $600,000, 80% is $480,000. With $350,000 left on your mortgage, you could access up to $130,000. The amount you qualify for also depends on your income, your credit and your other debts, because the lender has to approve the new, larger mortgage.

What Refinancing Costs

If you refinance when your term is up for renewal, there is usually no prepayment penalty. If you refinance partway through a closed term, you are breaking your mortgage contract, and the penalty is usually the higher of three months’ interest on what you still owe or the interest rate differential (IRD). That penalty can cost thousands of dollars.

Other costs to ask about:

  • Administration fees and any reinvestment fee from your current lender
  • An appraisal of your home
  • A discharge fee to remove the charge on your current mortgage and register a new one
  • Repaying any cash back you received when you took out your current mortgage

Your current lender can calculate what it would cost to break your mortgage, so you can weigh that against the interest you would save or the debt you would consolidate. Some lenders also offer a blend-and-extend, which avoids the penalty by blending your current rate with the rate on a new term.

Refinance, HELOC or Second Mortgage?

Refinancing is one of three common ways to borrow against your home. The right one depends on how much you need, how you want to repay it and what it would cost to break your current mortgage.

Refinance

Borrow up to 80% of your home’s value, minus what you owe. Your current mortgage is replaced by one new mortgage with one payment, but breaking a closed term early usually means a prepayment penalty.

Home equity line of credit (HELOC)

A revolving line of credit of up to 65% of your home’s value. Rates are usually variable, and you can borrow, repay and borrow again. Learn more about HELOCs.

Second mortgage

A separate loan on top of your current mortgage, up to 80% of your home’s value minus your mortgage balance. Your first mortgage stays in place, so there is no penalty to break it, but rates are generally higher. Learn more about second mortgages.

How the Refinancing Process Works

  1. Find out what it would cost to break your current mortgage. Your current lender can calculate the prepayment penalty and any fees.
  2. Work out how much you can borrow: up to 80% of your home’s appraised value, minus what you owe. You may need an appraisal to confirm the value.
  3. Compare rates and terms. Our advisors have access to over 30 lenders.
  4. Apply for the new mortgage, which replaces your current one. A discharge fee applies to remove the old charge and register the new mortgage.

A refinance typically takes two to four weeks. Find an Ottawa mortgage advisor to get started.

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Frequently Asked Questionsheader decoration

Yes, but breaking a closed mortgage early usually means paying a prepayment penalty, normally the higher of three months’ interest or the interest rate differential (IRD). Some lenders offer a blend-and-extend instead, which avoids the penalty. Refinancing at renewal usually has no penalty.

Most lenders let you borrow up to 80% of your home’s appraised value, minus what you owe. So you need more than 20% equity before you can take any cash out, and the more equity you have above that, the more you can borrow.

The biggest is usually the prepayment penalty if you break your term early. You may also pay administration, appraisal and reinvestment fees, a discharge fee to remove the old charge and register the new mortgage, and you may need to repay any cash back you received on your current mortgage.

A refinance replaces your mortgage with one new mortgage of up to 80% of your home’s value, minus what you owe, but may trigger a penalty if you break your term early. A HELOC is a revolving line of credit of up to 65% of your home’s value, usually at a variable rate. A second mortgage keeps your first mortgage in place. Talk to a Mortgage Advisor about which one fits.

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Ready to Refinance Your Mortgage? We Can Help! Contact Us Today.

The Mortgage Advisors team is prepared to deliver informed, professional insights that harness a thorough understanding of current market conditions. Whether you want an up-to-date calculation of your home equity or to discuss refinanced mortgage rates, we would be happy to work out suitable options for you. Get in touch with us today to schedule a consultation.

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