Refinancing a Mortgage in Ontario: Your Top Questions, Answered

Interest rates in Canada took a significant nosedive throughout 2020 and the first half of 2021 as lenders looked to buoy momentum during the pandemic. According to the CBC, those abnormally low mortgage rates appear to be sticking.

This has many Ontarians thinking: How does an existing homeowner capitalize on these historically low interest rates? One way to take advantage is to refinance your mortgage. But how much do you really know about the process?

In this article, let’s take a closer look at refinancing a mortgage. What is refinancing, when is it beneficial, and how do you find the right real estate lawyer in Ottawa or Cornwall to complete the job?

What Is Refinancing?

Unsurprisingly, this is the most common question that arises. It’s often followed by this question: Is it the same as taking out a second mortgage?

No, refinancing isn’t the same as a second mortgage. Whereas a second mortgage sees you borrowing against your home’s equity (i.e., a separate mortgage you take on the same property), refinancing involves replacing your current mortgage with a new one. You pick a new lender, acquire a new rate, and repay administrative fees like appraisal, title search, and title insurance.

Should You Refinance Your Mortgage?

Invariably, the next question people ask is: What are the benefits of refinancing? Should you do it, and, if so, when? Here are a few advantages of refinancing your mortgage to consider before taking the plunge:

• Take advantage of interest rates drops. As mentioned in the intro, a common reason homeowners refinance is to capitalize on low interest rates. If interest rates are higher than when you first mortgaged, refinancing often doesn’t make financial sense.
• Condense your loan term to pay your house off quicker. Maybe you’re comfortable paying what you’re paying month-to-month. You may still want to refinance when rates are low to pay more on the principal.
• Make the most of a strengthened credit score. Perhaps your credit score improved throughout your mortgage, allowing you to access lower rates. Refinancing rewards that hard work.
• Tap home equity to consolidate debt. Your home equity is, essentially, the value of your home minus how much you owe on your mortgage. With refinancing, you can replace high-interest debt with a low-interest mortgage to consolidate debt. Talk to a financial advisor before taking this step.  

Ultimately, the choice is yours.

How Do You Refinance a Mortgage?

Because refinancing comes with administrative fees, you want to try and keep those fees low to get the best deal possible. Therefore, look for a real estate lawyer that offers a competitive price at a flat/predetermined rate. Online real estate lawyers (or virtual lawyers) often tick this box, offering stellar refinancing services at an affordable cost.

Talk to a lawyer about refinancing. They should be able to steer the process so that minimal effort is required on your part.

Refinancing isn’t always a shrewd money move, but when interest rates are as low as this in Canada, they do make sense. Weigh your decision using the benefits listed above and speak to a virtual real estate lawyer about undergoing the process.

Credit: Binyamin Mellish Via Pexels

Interest rates in Canada took a significant nosedive throughout 2020 and the first half of 2021 as lenders looked to buoy momentum during the pandemic. According to the CBC, those abnormally low mortgage rates appear to be sticking.

This has many Ontarians thinking: How does an existing homeowner capitalize on these historically low interest rates? One way to take advantage is to refinance your mortgage. But how much do you really know about the process?

In this article, let’s take a closer look at refinancing a mortgage. What is refinancing, when is it beneficial, and how do you find the right real estate lawyer in Ottawa or Cornwall to complete the job?

What Is Refinancing?

Unsurprisingly, this is the most common question that arises. It’s often followed by this question: Is it the same as taking out a second mortgage?

No, refinancing isn’t the same as a second mortgage. Whereas a second mortgage sees you borrowing against your home’s equity (i.e., a separate mortgage you take on the same property), refinancing involves replacing your current mortgage with a new one. You pick a new lender, acquire a new rate, and repay administrative fees like appraisal, title search, and title insurance.

Should You Refinance Your Mortgage?

Invariably, the next question people ask is: What are the benefits of refinancing? Should you do it, and, if so, when? Here are a few advantages of refinancing your mortgage to consider before taking the plunge:

• Take advantage of interest rates drops. As mentioned in the intro, a common reason homeowners refinance is to capitalize on low interest rates. If interest rates are higher than when you first mortgaged, refinancing often doesn’t make financial sense.
• Condense your loan term to pay your house off quicker. Maybe you’re comfortable paying what you’re paying month-to-month. You may still want to refinance when rates are low to pay more on the principal.
• Make the most of a strengthened credit score. Perhaps your credit score improved throughout your mortgage, allowing you to access lower rates. Refinancing rewards that hard work.
• Tap home equity to consolidate debt. Your home equity is, essentially, the value of your home minus how much you owe on your mortgage. With refinancing, you can replace high-interest debt with a low-interest mortgage to consolidate debt. Talk to a financial advisor before taking this step.  

Ultimately, the choice is yours.

How Do You Refinance a Mortgage?

Because refinancing comes with administrative fees, you want to try and keep those fees low to get the best deal possible. Therefore, look for a real estate lawyer that offers a competitive price at a flat/predetermined rate. Online real estate lawyers (or virtual lawyers) often tick this box, offering stellar refinancing services at an affordable cost.

Talk to a lawyer about refinancing. They should be able to steer the process so that minimal effort is required on your part.

Refinancing isn’t always a shrewd money move, but when interest rates are as low as this in Canada, they do make sense. Weigh your decision using the benefits listed above and speak to a virtual real estate lawyer about undergoing the process.