Refinancing

Refinancing is used to borrow against the property’s value for various reasons: to pay debts, make renovations, or invest.

Refinancing terms

When the ratio of your loan to the property’s value is less than 80 percent, you can access your equity through refinancing. The equity in your property belongs to you but you must requalify for this new loan.

Sample calculations

Example 1: You bought a property at $200,000. Since the purchase, its value has increased to $220,000. You have $150,000 remaining on the mortgage. Your ratio therefore will be: $150,000 / $220,000 = 68 percent, so you qualify!
Example 2: You bought a property at $200,000. Since the purchase, its value has not increased and you have $180,000 remaining on the mortgage. Your ratio therefore will be: $180,000 / $200,000 = 90 percent, so you do not qualify. Unfortunately, you will have to wait until you have a little more equity accumulated in your property.
Amount estimation : You bought a property at $200,000. Since the purchase, its value has increased to $220,000. You have $150,000 remaining on the mortgage. When refinancing, you therefore could access: $220,000 - $150,000 = $70,000 X 0.80 = $56,000.


An important point to consider

You should also keep in mind that refinancing sometimes involves repayment of your current loan before its term. This constitutes a breach of contract that requires you to pay penalties. You therefore should consult me so we can review your situation together.

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