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Reasons to refinance your home mortgage:

• Get a lower interest rate and save on monthly payments.
• Lock in a particular rate if you believe rates are going to rise in the future.
• Take out equity and use the extra money for renovations, education, and more (see home equity loan).
• Change from a variable rate mortgage to a fixed rate loan in order to have stable monthly payments.
• Change from a fixed to a variable rate, if you believe rates are going to fall in the future.
• Consolidate debt such as credit cards, car loans and student loans into one monthly payment.
• Combine two mortgages into one and enjoy potentially lower monthly payments as a result.

Explore your mortgage refinance options today. Simply enter your postal code to get your 'best refinance rate' and a personalized quote online through Kanetix!

Additional information about home loan refinance

Your mortgage lender may require you to pay a penalty in order to opt out of your current mortgage obligations.

These penalties in most cases are one of three options:

1. A three month interest penalty to break the current mortgage.
2. A set penalty amount provided to you by the lender at signing of your current mortgage.
3. The third and usually most expensive form of penalty is Interest Rate Differential (known as IRD). Each lender calculates their penalties differently and you should ask your lender for a “payout summary” in advance to find out if it makes financial sense to break your mortgage.

The break even period

The break even period is the time it takes you to cover your refinancing costs (closing costs) and truly start saving money. This period can span from few months to several years depending on how high or low your closing costs are.

Let’s say you refinance a $200,000, 20 year mortgage from 9.5% to 6.5%. As a result your monthly payments went down from $1,840 to $1,481, which is $359 in savings every month. Lets assume that the costs to refinance added up to 3% of the $200,000 loan, equaling $6000. In order to break even on the $6000 in closing costs, it would take roughly 1 year and 5 months to breakeven. (17 x $359.00 = $6103.00)

Although you have to wait to break even, it does not mean that you have to wait to start enjoying the savings. After all, a few hundred dollars difference in monthly bills can be quite noticeable.

Refinance mortgage rate(s)

A lower interest rate is one of the most common reasons for refinancing home mortgages. In order to get the most from a refinance mortgage, the new rate should be lower than the interest rate on your current loan.

Refinancing your mortgage at a reduced interest rate not only lowers your monthly costs, but can help to build your home equity faster. For example, a $150,000 mortgage at a 9% interest rate has a principal and interest rate payment of $1,333 per month, while the same mortgage with a 6% interest rate comes down to $1,068. If some of the savings are applied to the principal mortgage amount, the equity in your home can build up faster

Another refinancing option may be to keep your payment steady, but shorten the term of the loan. It could make sense to cut the mortgage term from 25 years to 15 years under certain circumstances. It is however important to note that the break even period could be considerably longer, and you would have to stick with this refinance option for the next several years to get the most out of it.

Refinancing your home to take out home equity

Taking equity out of your home is an alternate way to pay for expenses such as education, renovations, vacations, credit card bills or any other expenditures you have in mind. To learn more about equity takeouts, please go to the home equity loan page.

Converting from a variable (adjustable) rate mortgage to a fixed rate mortgage, and vice versa

Adjustable rate mortgages typically have lower interest rates than fixed rate mortgages, but the payments can go up or down at any time without notice. This could be a huge inconvenience, if you don't have ready cash on hand. Most folks prefer knowing what their monthly expenses will be in advance. Converting to a fixed rate mortgage may save you money in the long term if interest rates rise, but most importantly a fixed rate mortgage offers stable, fixed monthly payments that will never change during the term of the mortgage. Some lenders even offer the flexibility of taking a variable rate with the option to convert into a fixed rate at anytime without penalty. A good mortgage broker should have the foresight to advise and plan according to your needs.

Conversely, if you are comfortable with the risk, switching from a fixed to a variable rate mortgage may also be a good refinancing strategy under the right circumstances - like a declining or low rate environment. (You may want to secure an option to lock into a fixed rate mortgage without penalty and keep a close eye on the rates.)

Historically (last 30 years), the variable rate mortgage has been the money saver, but this is because interest rates in general have been declining for decades. This may not always be the case.

Both options can be further explored through Kanetix. You may also want to experiment with our on site mortgage refinance calculator.

Refinancing mortgage for debt consolidation

Using mortgage refinance to consolidate debt can be a great way to tap into the equity of your home to get rid of high interest credit card debt, car loans, student loans and other debt obligations. Mortgage refinancing can help to stabilize and improve the financial condition of disciplined and responsible borrowers. Please note that the Kanetix service is not able to process debt consolidation loans for borrowers who do not own a property.

Refinance a second mortgage

When you refinance a second mortgage, you will be eligible for the same benefits as when refinancing your first mortgage, such as lower rates, potentially lower monthly payments or a shorter borrowing term. You can also consolidate first mortgages and second mortgages into one mortgage loan, so as to have one monthly payment instead of two. This one payment is likely to be lower than your 1st and 2nd mortgage loan payments combined.

Because you can obtain mortgage quote refinance rates in seconds online, you can explore a variety of scenarios and make smarter decisions on the refinancing of your home.

Refinance mortgage loans through Kanetix - save time and money! Begin by entering your postal code at the top of the page!

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