For Canadian homeowners, the concept of remortgaging can often be a perplexing topic. Whether you’re aiming to secure a better interest rate, access equity from your home, or consolidate debts, understanding the intricacies of remortgaging is vital. Dive into this A to Z guide to get a clear picture of remortgaging in the Great White North.
A – Appraisal
The process of determining your home’s current market value. An appraisal is necessary when remortgaging to understand how much equity is available to you.
B – Broker
Mortgage brokers can help navigate the complexities of remortgaging by offering advice, comparing rates, and assisting with applications.
C – Credit Score
Your credit score will influence the remortgage deals available to you. A higher score typically yields better rates and terms.
D – Debt Consolidation
One primary reason Canadians remortgage is to consolidate other high-interest debts into their home loan.
E – Equity
The difference between your home’s current value and the outstanding mortgage amount. Equity can be accessed when remortgaging.
F – Fixed Rate
A mortgage where the interest rate remains consistent for a set period.
G – Gross Debt Service Ratio (GDS)
A metric lenders use, GDS considers your housing costs as a percentage of your income.
H – Home Insurance
Proof of home insurance may be required when remortgaging.
I – Interest Rates
One of the most significant factors in remortgaging. Many homeowners seek to remortgage when rates drop.
J – Justification
Understand your reasons for remortgaging. Whether it’s accessing funds, securing a better rate, or changing loan structures, have a clear rationale.
K – Know Your Terms
Be familiar with the term of your current mortgage, as breaking it early might incur penalties.
L – Loan-to-Value Ratio (LTV)
The ratio between the amount borrowed and the home’s value. A lower LTV often results in better remortgage rates.
M – Mortgage Penalties
If you remortgage before your term is up, you may face penalties. Always calculate these costs before making decisions.
N – Notary Public
A professional who can witness and authenticate important remortgage documents.
O – Offers
Once your remortgage application is approved, your lender will provide a formal offer detailing the new loan’s terms.
P – Porting
Transferring your current mortgage to a new property. Useful for those looking to move but wanting to retain their current mortgage terms.
Q – Qualifications
Lenders will assess your income, credit score, and property value to determine if you qualify for a remortgage.
R – Refinancing
Another term for remortgaging, it means revising the terms of your existing mortgage.
S – Stress Test
A tool used by Canadian lenders to ensure borrowers can manage potential future rate increases.
T – Terms
The conditions and duration of your mortgage agreement. In Canada, terms usually range from 6 months to 10 years.
U – Underwriting
The process lenders undertake to evaluate the risk of lending to a borrower.
V – Variable Rate
A mortgage type where the interest rate can fluctuate based on market conditions.
W – Waiting Period
After applying, there’s usually a waiting period before your remortgage is approved and funds are released.
X – eXamine Options
Always explore multiple remortgage offers to ensure you’re getting the best deal.
Y – Yield
In the mortgage world, this typically refers to bond yields, which can influence fixed mortgage rates.
Z – Zero Regrets
Make informed decisions to ensure you have no regrets in your remortgaging journey.
Remortgaging can be an excellent tool for Canadian homeowners, offering opportunities to reduce interest costs, access home equity, and better manage finances. This A-Z guide provides a foundation, but as always, consulting with mortgage professionals will ensure you make the best choices tailored to your situation. You could also check out our glossary of mortgage terms for more information.
For more insights and assistance, the Remortgaging.ca team stands ready to guide you every step of the way in your remortgaging journey.