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Mortgage refinance can prove beneficial in several ways.
Get cash out for any purpose
Consolidate high-interest credit cards
Lower your monthly payments
Renovations and home improvements
Programs for self-employed
Canada's best prepayment options
“My friend rolled their car loan and other debt into their mortgage. Can you do that for us?”
When someone says this to me, I know what they really want to do is use the equity they’ve built up in their home to help alleviate some of their financial pressure and free up cash flow. And, yes, I can help with that!
What do you mean by ‘equity they’ve built up in their home’?
When you own a home you are building a sort of savings account. I like to call it the Forced Canadian Savings Account. As each year passes, your home likely increases in value. On top of that, you are paying down your mortgage. An asset you’re actively paying down is also increasing in value. Together, the two processes build equity.
Do all homes increase in value?
When you add on the layer of sweat equity for the work you have done to your home or paid someone to do to your home, you are creating greater equity in the property. From replacing vintage shag carpet to planting a rose garden to remodeling a kitchen – your investments are helping the value of your home go up, up, up.
Another factor in house values is time. Most homes appreciate in value over time and in certain cities like Ottawa, demand is high as the population grows.
So many of my past and present homeowners take incredible pride in owning a home, paying it off, and using it as a tool to assist financially during or for retirement. In nearly all cases, their homes have appreciated in value – sometimes dramatically. But don’t take our word for it – we work with highly experienced home assessors that take into account everything from comparable properties in the neighborhood to your square footage, the condition of the home, and the number of upgrades and features it has.
Why is equity such a big deal?
On occasion, we need to take some of this equity out of the home.
From time to time, life happens and it almost happens in threes, right? If you do not have an emergency savings account set up, you may have relied on credit cards or lines of credit and maybe even personal loans. When the burden of the debt becomes too heavy, you may want to use some of the equity you have built up in the home. Or maybe you renovated your kitchen and now you would like to take advantage of the home equity you’ve created to pay the line of credit or credit cards that were used to pay for the work that was done. You can use your equity for that!
So how exactly can I take advantage of this equity to pay for things?
Some of the factors we look at are how much it would cost to remove some of your house equity and put it back in your pocket. If you’re making the choice to break one mortgage contract and get another, there will be penalty costs rolled in and we want to make sure that this choice still makes good financial sense.
There are rules and guidelines we have to follow along the way. There are federal guidelines set up to protect us from ourselves. For instance, you can access up to 80% of the equity in your home. Of course, this is all contingent on your credit not being too badly bruised. It’s also one of the main reasons we work with an assessor. We want to make sure your house is indeed worth what you estimate it is so you don’t get into valuation troubles down the road.
Amazing! Let’s do this! Can it happen tomorrow?
All things go well, it takes at least 3 weeks to complete the process. The timeline depends in part on you and how long it takes to get the documents to me.
We can get started and make great progress tomorrow but this is a multi-step process with many different players. It takes some time.
What are the documents needed to move forward?
Let’s talk paperwork! It’s time to make your list and check it twice because lenders and banks are rather particular in their requirements. Before you submit your paperwork, read over it to make sure all the listed information is included.
See the document section for a list of documents you may need.
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