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Are you feeling the pinch of rising prices? If you’re thinking of ways to better manage your debt, one solution is worth considering: a mortgage refinance.
Through it, you can gain access to the equity you’ve built up in your home over time to achieve your goals. Not only can this help pay down high-interest debt faster, but it can also open cash flow for larger expenses, like home repairs and your child’s university tuition.
Mortgage refinancing is when you break and pay off an existing mortgage contract and start a new one. You can use a different lender or the same one—but it will come with new terms, interest rates and repayment options. This is typically done to consolidate debts, lower payments and cover larger expenses, like a down payment to get a loved into the market.
Some lenders will let you borrow up to 80% of your home’s estimated value. Let’s say, for example, your home is worth $750,000 and you have $400,000 left on your mortgage. If you subtract $400,000 (the amount you owe on your mortgage) from $600,000 (80% of the estimated value of your home), you’re left with $200,000 in equity that you could borrow.
Keep in mind: there are a few things to consider when refinancing a mortgage with another lender. Mortgage stress test, property appraisal lawyer fees, and paperwork are a few of the things you may encounter. You should also be aware that breaking a mortgage can mean being charged a penalty. Review your options with your advisor to find out what’s best for you.
In short, yes.
Debt consolidation is one advantage of mortgage refinancing. The idea behind it is simple:
When exploring whether mortgage refinancing is a good idea, it’s always best to work with a trusted advisor who can provide tailored advice based on your unique needs, goals and financial situation.
Refinancing your mortgage can help increase cash flow and pay down high-interest debt faster. That said, it’s not the right strategy for everyone, so be sure to always speak with your financial advisor before making any significant changes.
Ask us your questions and we’ll tailor our advice to you. Talk to us on the phone, or in-person at the branch. We here for you.
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