Refinancing, also known as remortgaging, simply refers to when you make changes on your mortgage, valued assets, and overall financial situation.
Remortgaging often means new access to funds you didn’t know were available to you. You can use this to lower mortgage payments or make an optional cash flow.
If you have a mortgage at a bank somewhere, you don’t have to stay with your original institution to remortgage. An experienced mortgage broker can help you see where you could make small changes that add up to a more comfortable arrangement for your month-to-month expenditures. Or you could do a complete overhaul, using creative strategies to lower rates, extend your amortization period, or access more equity in your home or for better mortgage options.
What Could You Do with Some Extra Money?
When you refinance your mortgage, you can spend the money you free up any way you want to. Many people remortgage to release a quantity of funds that they could use instantly for a large purchase or project.
Here are a few reasons why people may consider refinancing.
Home Renovations.
Major repair projects, upgrades, or additions can be both necessary and immediately useful endeavours that preserve or add to the value of your home. Retiring seniors may consider remortgaging their home rather than taking out other types of loans or withdrawing from other high-interest investments, as remortgaging often has a lower rate.
Higher education or training programs.
Helping a child pay for college – or going back to school yourself – can be challenging as education costs continue to rise. Remortgaging has the ability to free up hundreds of dollars a month, enabling those funds to be put toward tuition.
Business start up.
Refinancing to invest in a business idea comes with some risk, but refinancing often frees up funds you can access at a lower interest rate than other loans. One key component of your business plan would be to consider your new mortgage repayment amounts based on projection of the business’s profits. If the business is likely to take time to become profitable, remortgaging is more safely done when other finances are in place to carry the mortgage rather than depending on payouts from the new business.
Buy a second home or rental property.
Sometimes, remortgaging can free up a sizable enough range of funding to put a second home or rental property within reach. Owning rental properties can be a lucrative way of investing for the future by acquiring properties, which usually only go up in value. Before selling the property years down the line, you would need to be able to afford the mortgages and fees incurred by both properties.
Pay off debt.
Debts with higher interest rates take longer to pay off and mortgage lenders are often agreeable to taking on these debts, consolidating them into one convenient payment for the borrower. If you’ve accumulated debts with high interest rates, refinancing may be a wise choice. Doing so may raise your mortgage payments or extend the length of your mortgage repayment plan, but often at a lesser overall cost than making separate debt payments.Younger homeowners with a considerable amount of time left on their mortgage may find this option especially profitable. As the overall health of your finances improves, your mortgage broker or investment advisor can also suggest other strategies for keeping interest rates low for ongoing financial obligations while staying on top of recommendations they may have for high-interest investments that further your financial goals.
Other investments.
Boost your overall financial outlook with a large investment using assets you already have. For retirement age homeowners, a more comfortable retirement could be within your grasp by simply employing a remortgaging strategy that gleans financial rewards within a few short years.
Good Timing
You can request to refinance your mortgage at anytime, however refinancing outside of your existing mortgage’s scheduled renewal date may incur applicable fees or penalties.