How Does Refinancing A Mortgage Work In Canada?

If you are a homeowner in Canada, you may have heard about refinancing a mortgage. However, what exactly is refinancing, and how does it work? In this blog post, we will take a closer look at refinancing a mortgage in Canada and explain everything you need to know.

Refinancing a mortgage means that you are replacing your existing mortgage with a new one. You can refinance with your current lender or switch to a new lender altogether. There are several reasons why you might consider refinancing your mortgage, including:

1. Lowering your interest rate: If interest rates have dropped since you first took out your mortgage, refinancing can help you get a lower rate and save money on interest.

2. Changing your mortgage term: If you want to shorten your mortgage term or switch from a variable rate to a fixed rate, refinancing can help you do that.

3. Accessing equity: If you have built up equity in your home, you can refinance your mortgage to access that equity and use the funds for things like home renovations, debt consolidation, or investing.

So, how does refinancing work in Canada? Here is a step-by-step guide:

Step 1: Contact a licensed mortgage professional

The first step is to contact a licensed mortgage professional who can guide you through the refinancing process. They will help you evaluate your current mortgage and determine whether refinancing makes sense for you.

Step 2: Documents required for a new mortgage

This involves providing documentation like pay stubs, tax returns, and bank statements to prove your income and assets. You will also need to have your home appraised to determine its current value.

Step 3: Have a mortgage professional shop the mortgage market for lenders

As a mortgage agent with access to over 50 lenders, "we" can help you find the right lender to refinance your mortgage to meet your specific needs.

Step 4: Close the new mortgage

After your application is approved, you will need to close the new mortgage. This involves signing a new mortgage agreement and paying closing costs like legal fees, appraisal fees, and title insurance.

Step 5: Pay off the old mortgage

Finally, you will need to use the funds from your new mortgage to pay off your old mortgage. Your new lender will take care of this for you.

Refinancing a mortgage can be a great way to save money on interest, access equity, or change your mortgage term. If you are considering refinancing, we can help you find the right lender and guide you through the process.