What is a mortgage refinance?
Refinancing a mortgage is essentially paying off your existing Home loan in order to replace it with a new one. There are many reasons why someone would want to refinance their mortgage.
Find a lower interest rate (%)
By using our remortgage calculator, you will be able to see how much interest you will save a month compared to the cost to refinance. You as the Homeowner will have to consider whether paying a fine for breaking your loan contract is worth it.
The penalty for breaking your mortgage prematurely is initiated by your mortgage lender and is based on the original contract date, current mortgage balance and interest rate.
A lowered rate will save you cash and simultaneously build equity in your current Home.
Shorten the mortgage term
As mortgage rate decreases, Homeowners will have a window of opportunity to refinance their current loan for another without drastic changes in the monthly payment. They also benefit with a shorter term in the long run.
Switch mortgage interest rates
Rapid increases in variable rates can make Homeowners uneasy about their choice to rely on the prime rate. Converting to a fixed-rate will most likely guarantee a lower interest rate while also taking away the fear of the whether or not the rate will spike again.
On the other hand, jumping from a fixed rate to a variable rate would be a good plan if the interest rates were declining. Decreasing rates result in lowered monthly payments which also cancels any thought of refinancing. Converting to a variable rate is also a good strategy for short-term Homeowners. Since they are not planning to stay long enough for the interest rates to increase, they can enjoy the lowered rates and monthly payments.
Access Home equity
Your mortgage lender will give you money based on a portion of your Home that you own. If an appraisal says your Home is worth $450,000 and your mortgage is $400,000, you then own $50,000 of the property. This is your equity.
Tapping into your Home's equity is usually reasons concerning debt consolidation, Home renovation or for a big purchase such as a post-secondary education.
By requiring your equity, you are ultimately breaking your loan and as a result you will be charged a penalty by your mortgage lender.
How do I use equity to consolidate debt with a refinanced mortgage?
By refinancing your Home, you will have two mortgages. The second loan will be used to consolidate your debts. You can use this money to get yourself back on track.
The benefits of a refinance include:
- Very low interest rates
- Flexible payment arrangements
How do I use the remortgage calculator?
Estimate the penalty for breaking your mortgage contract
You can ask your lender how much this penalty will be or if you don't know the exact amount, you can leave the field empty. We will be able to estimate the penalty.
If there is no penalty for ending your term, manually enter "0"
Find out how changing your mortgage affects the interest
By increasing/decreasing payments, shortening your term length and/or changing the rate, you will be able to see how much the interest changes.
Find out whether or not a debt consolidation is right for you
Our calculator lets you test out how much equity you can take out and use towards your unresolved debts.