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Hi everyone, welcome to another edition of Homebuyer's School, today I'm joined
by Mutjaba Syed, manager mobile
mortgage specialist with TD Canada Trust, and
today the question we're going to answer is,
"What are the different types of mortgage refinancing?"
That's a good question Karl, so we
actually have different types of refinancing available for different
situations that you might have if your term has come up with your current bank
right now, and you're looking at moving into a different institution for a
better rate that is also considered a refinance, that's also considered a
transferring as well, but if you also feel like you've
actually paid down your mortgage, there's some equity available, you want to be
able to use that equity for whatever needs you might have. It could be a debt
consolidation paying off some loans, purchasing an investment, we can also
take money out which is also considered and equity takeout which is also a
mortgage refinance as well.
So when would you actually refinance-- from a transfer
point of view-- what are some situations that would occur?
Yeah so technically if your term is coming up and you feel like there's better rates
available or better terms available with your institution that'd be a great
time to actually talk about that transfer from your current bank to a
different bank just to see how much of a benefit it is for you to actually move
institutions all together. Usually banks will give you 4 months prior to your
renewal date to actually give you that time to kind of show up and decide
if you would actually like to stay with your current institution or actually go to
a different institution for maybe better rates.
Is there a penalty if you want to
transfer before that 4 month period?
Absolutely so before the 4 month period you can
actually renew with your own bank within the 4 months without any penalties but
if you did decide to actually leave prior to your term actually coming up
for renewal then definitely there's going to be a penalties and the
penalties could determine--could just be based on a lot of different things so I
would definitely have a conversation with your bank to see if there are any
penalties and if they are, what type and how much are they.
So Mo, when should you refinance a mortgage?
Yeah, so if you ever feel like you want to be--your term is
coming up would be a great time to actually look at switching banks if
you're getting a better, more competitive rate or another good time is to see if
you have some equity available if you actually pay down your mortgage, done a
great job in paying it down and you feel like you want to be able to use those
funds towards debt pay down, you want to pay off some loans or credit cards, you
want to be able to take some money and invest it into other things or even
purchase, it would be a great time to refinance your home.
When says I want to take out a second mortgage, is that the same
thing as refinancing a mortgage and when would you do that?
Yeah absolutely, so taking out a
second mortgage just means to the bank is that you're actually
taking out--putting a lien after your first mortgage, so let's say if your
first mortgage is in place right now and you still have some time remaining on
your term and you still need some money available and you don't want to break
your term and face a penalty, banks do offer--you have the option of taking
a second mortgage out on your home if there's equity available and that's a
very good option to actually exercise if you feel like there is need for you to
actually access some funds.
Right. So Mo, so you anything else to add?
Yeah, what I would
say I would definitely recommend reaching out to your bank to your lender
to your specialist to see if taking some extra funds I would actually impact your
current mortgage right now, it's a great conversation to have with them and to
see, but if you definitely need some extra funds, book an appointment with
your specialist and see what all your options are.
Great, well perfect.
Thank you very much Mo. Everyone just remember we have a lot of videos on
mortgage pre-approval and especially the new--our new video on the new mortgage
rules in Canada. Thank you very much for joining us and
we'll catch you next time.
That's another edition of
Homebuyer's School, tune in
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