![]() ![]() If you break your mortgage before that term is over, you'll be charged a pre-payment penalty as a way to compensate the mortgage provider. When you agree to a particular mortgage term, your are signing a contract for that amount of time, generally between one and 10 years. If you’re refinancing in a falling interest rate environment, you may be able to take advantage of interest savings as a bonus. Use Ratehub.ca’s refinance calculator to determine your maximum equity and the corresponding penalty. Unfortunately, accessing this equity comes at a cost – your lender will charge you a penalty for breaking your mortgage early. In Canada, mortgage holders can access a maximum of 80% of their home's value, less any outstanding mortgage balance. If refinancing for equity, the first thing you want to determine is the maximum amount of equity you can access. Many lenders will allow you to borrow from them using your home equity as security for the loan - this is what accessing your equity is all about. Your home equity is calculated by taking the current value of your home, then subtracting from that your outstanding mortgage amount. Refinance to access home equity as cashĪs you pay off your mortgage, you'll gradually build up equity in your home. This penalty is charged by your lender for breaking your mortgage contract early, and is based on your original contract date, current mortgage balance, mortgage rate and other factors. As most mortgage brokers and lenders will cover your legal costs, the main cost you need to worry about is your break of mortgage penalty, known as the pre-payment penalty. To determine if you can save money with a lower mortgage rate, use our calculator to compare the monthly interest savings against the cost to refinance. Then, read on for more information about refinancing. You can learn more about how to lower your existing mortgage payment amount in this helpful video below. There are two main reasons you’d consider doing a refinance: To lower your existing mortgage rate, or to access the equity you’ve built in your home as cash. If you're refinancing your mortgage while you're in the middle of an existing mortgage term, you're likely to be hit with a pre-payment penalty - more on that below. You can do this with your current mortgage provider or switch to another. Refinancing a mortgage is when you end your current mortgage and start a new one. While there may be some non-financial reasons for wanting to refinance your mortgage, our calculator gives you the important information you need to start making a decision. The mortgage refinance calculator above will do the hard work for you, estimating the penalties associated with refinancing as well as the potential savings you'll make from getting a new mortgage at today's rates. As a result, it's important to understand how much a mortgage refinance will cost you before you pull the trigger - that's where a mortgage refinance calculator comes in handy. However, there are costs associated with refinancing that can outweigh any potential savings you might build. For a first home buyer, the amount you save plus your rent plus discretionary expenses is a good indication of how much you can afford.Refinancing your mortgage can be a really valuable option as a homeowner. Lenders are looking for affordability to be evident in account conduct and bank behaviour. Living expenses are assumed around $800 per adult per month and $400 per child along with allowances for insurance, rates, utilities and cars. The other big factor when it comes to affordability is disclosure of expenses, which get assessed on a more granular level. For owner-occupied properties, lenders have varying boarder income policies however you can typically count on up to two boarders at $150 each per week. For investment properties, lenders will include 75% of the rental income. Lenders will include 100% of your PAYE income, or the average of the past two year's business income if you're self-employed. ![]() Lenders test your ability to afford a mortgage by looking at your repayments over a 30 year term, based on a test mortgage rate of around 7.00%. ![]()
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