Debt refinancing is a relatively simple process which involves evaluating your home to see if you have built up enough equity and checking your income to see if you qualify to refinance. Lenders will allow you to refinance up to 80% LTV (loan to value)
Once you make the decision to refinance, you will need to provide financial documentation to support the increased mortgage amount as well as pay certain fees.
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Before you make any decisions, let’s consider a $500,000 mortgage on a $1 million home that currently has a mortgage rate of 3%. Your lender is also offering a mortgage refinance rate of 3%. You currently have $50,000 in credit card debt that has an interest rate of 20%, $100,000 in a personal loan at an interest rate of 7%, and a $50,000 car loan with an interest rate of 5%.
With a mortgage refinance, you can borrow an additional $300,000 at an interest rate of 3%. That’s more than enough to cover your other $200,000 of debt that all have a higher interest rate. If you were to not refinance your mortgage and continued to keep these other debts as-is, you will be paying:
Combined, you will be paying $19,500 just for the interest from these debts in one year. How much can you save if you refinance to pay off these debts?
Mortgage Refinance
You can borrow $200,000 to pay off these debts at a 3% interest rate. You will be paying roughly $6,000 interest in one year. By refinancing your mortgage to pay off higher interest debt, you can save $13,500 per year from interest savings after paying $2000 up front to refinance.
Rather than pay exorbitantly high fees for credit card payments and car loan payments you could simply refinance, consolidate your debt and pay a much smaller amount of interest per year to service the debt.
$50,000 at 20% per year will be $10,000 interest paid in one year
$100,000 at 7% per year will be $7,000 interest paid in one year
$50,000 at 5% per year will be $2,500 interest paid in one year
1. Borrow More Money
Refinancing to pay off debt is done so that you as the borrower can borrow more money, and more specifically orrow a large amount of money all at once. This is in comparison to other options that may have lower limits such as credit cards or lines of credit.
2. Borrow at a Lower Interest Rate
Debt refinancing allows you to borrow money as a secured loan through your home so you will be paying a much lower interest rate that a traditional credit card or other unsecured loans which typically have higher interest rates.
3. Borrow with Smaller Required payments
All mortgages are amortized over a period of 25 or 30 years. This means that your mortgage payments are spread out over a long period of time versus traditional credit methods with typically require shorter payment windows.
At SafeBridge our access to over 63 different lenders sets us apart. With over 20+ years in the mortgage lending space our team of mortgage professionals is qualified to help you find cottage financing that suits your needs.
No two cash-out refinancing situations are alike and we pride ourselves in customized solutions that solve your unique challenges with regards to refinancing.
When you work with SafeBridge, our team of professionals take the time to understand your situation and come up with the perfect financing solution. It is always in your best interest to work with a company that will not only help you secure financing but also keep in mind your holistic financial goals and make sure they are all in alignment. As a company we help thousands of clients each year find the perfect financing solution to fit their needs. When it comes to refinancing, our team of exceptional mortgage brokers will assist you with finding the perfect financing terms.
If you would like to learn more about refinancing your home, click here to speak with a SafeBridge Agent today!
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This depends upon what type of a mortgage you currently have. If you are in a Variable mortgage you will need to pay 3 months interest to break your mortgage, but if you are in a Fixed mortgage you will need to pay the IRD penalty which will be calculated by your lender.
You pay almost 18-20% on your credit card verses 3% on your refinanced mortgage. By refinancing to consolidate debt you could say thousands of dollars per year.
Chris is a Co-Founder and Financial Advisor at SafeBridge Financial Group, the originators of Mortgage Centered Financial Planning, and is passionate about serving his clients and empowering the incredible team to “Be Better. Be Inspiring.” Prior to co-founding SafeBridge, Chris started his career as a Financial Advisor with Sun Life Financial, formerly Clarica Financial Services, and had the privilege of serving many clients financial needs for over a decade.
Chris Karram,
Over the last 20 years we’ve been successful in attracting over 60 various lenders that our clients can benefit from. SafeBridge has evolved over the years and has become a very successful company…. The education, that comes along with not just the mortgage agent side of things, but also on the insurance and the investments and the financial planning all comes together in one holistic approach.
Elisseos,
Dena is a seasoned Mortgage Broker with 24 years experience in the financial industry. She started her career at Canada Trust as a part-time Teller while attending York University. During her 15 years with TD Canada Trust, Dena held various positions of increasing seniority. As a Senior Financial Advisor she gained knowledge in many disciplines in the banking and investment arena.
Dena Kakaletris,
For several years Andre has worked in the Financial Planning and Mortgage Solutions field with Scotiabank. After experiencing success, and gaining a wide knowledge base in the banking world, he decided to leave the bank to join a Boutique Mortgage Brokerage, Safebridge Financial Group. Andre made the change so that he could offer clients a wider variety of mortgage options and lenders.
Andre Persaud,
At SafeBridge we believe in experiencing growth together. We want to ensure that each of our agents is successful and feels a part of the SafeBridge team. We offer customized training, lender previews, team events and even team trips to build the strong culture of inclusion and support that so many of our agents enjoy.
We believe it is essential to hire and Partner with the right people. We are looking for the best and brightest in the Industry to join our Exclusive Group of Professionals. Our team consists of loyal top producing Agents that have demonstrated exceptional care for their clients and passion for the industry in which they serve. Our Mortgage Centered Financial Planning approach helps our team foster long lasting relationships, which brings a unique process to the mortgage business.
With over 20+ years in the Mortgage Industry, SafeBridge has built a solid reputation in the industry and is well respected by all major lending partners. SafeBridge has partnerships with over 10 insurance providers in Canada and has access to hundreds of mortgage products.
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