Is Refinancing Your Mortgage Worth It?

mortgage refinancing

Whether you are looking to access money from your home’s equity or simply lower the interest rate on your mortgage, you may have considered refinancing. But what is refinancing your mortgage and is it worth it?

Refinancing your mortgage means breaking your current mortgage and getting a new one. It could either be with the same lender or a different lender. Since you are breaking your first mortgage, however, it is usually going to mean that there will be some kind of financial penalty – and the further away you are from your renewal date, the larger that penalty is going to be.

In order to determine whether refinancing your mortgage is going to be worth it for you, your mortgage broker can run some calculations to determine whether the amount of money you stand to save from a refinance or more or less than the financial penalty that you will have to pay.

Here are a few considerations in determining whether or not refinancing your mortgage will be worth it.

  1. How much interest will you save?

If interest rates on mortgages have recently dropped, it may make sense to refinance your mortgage. Or if you are currently in a high interest mortgage (such as a private mortgage) and have improved your credit score to the point where you can qualify for a lower rate, then refinancing your mortgage could save you a lot of money. But mortgage interest isn’t the only interest that you can save with a refinance. If you have high-interest debts that can be consolidated into your mortgage, refinancing could considerably lower your debt interest as well.

  1. How much of a penalty will you have to pay?

As mentioned, when you break your mortgage to refinance, you will have to pay a financial penalty. The amount of this penalty reduces the closer you are to your renewal date. Your mortgage broker can find out for you how much you will have to pay.

  1. Do you need to access cash from your home equity?

Refinancing your mortgage is one way in which you can access cash from your home equity. If you require money for a large expense such as a home renovation or starting a business, a mortgage refinance may be a good way to get that money at a low interest rate.

Is Mortgage Refinancing Right for Me?

If you want to find out whether refinancing your mortgage is the right option for you, the best thing to do is to contact a professional mortgage broker who can do the calculations for you. But even if refinancing isn’t the right option, your mortgage broker can show you other strategies that can help.

To schedule an appointment with a qualified mortgage broker, contact us today!