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Refinancing Your Mortgage



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When should you refinance your mortgage?

Wondering if refinancing is right for you? See how the refinancing process works and how tapping into your home equity can help you pay for your big plans.

Mortgage Refinancing

Your home can be more than just a place to live – it can also be a source of personal equity. That means you can use the value of your home to access extra funds for a variety of things, like renovations, major purchases and more. Typically, you can borrow up to 80% of your home’s appraised value.
Leveraging your home equity – also known as refinancing – is a cost-effective and convenient way to borrow money. First, a few basics about refinancing.

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  • Refinancing vs renewal
    Renewing and refinancing your mortgage are two different things. Renewing happens when you’ve reached the end of your mortgage term. If you still haven’t paid off your loan, you may choose to pay off the balance of your mortgage or renew for another term. Refinancing allows you to access money based on the equity you have built in your home.
  • How does refinancing work?
    Refinancing a mortgage simply means replacing your old mortgage loan with a new one. You can refinance a mortgage at any point during the term, however one advantage of doing it a maturity is saving an interest penalty. Near the end of your current mortgage term, you’ll be told that your mortgage is reaching maturity. This is an opportunity to look at how much home equity you’ve built. As part of the refinancing and assessment process, you’ll be able to see how much your home or property has appreciated in value. That’s when you may also want to think about whether you can use that equity to pay for something big, like that kitchen renovation you’ve always wanted.
  • Putting your home equity to work
    Here are some of the most common reasons why people access home equity:
  • Home renovations
    Home renovations can take on many forms. Maybe you want to improve curb appeal, give your kitchen a makeover, finish your basement or add another bathroom. As well, you can use your funds to make “green” updates that can help reduce your energy bill.
  • Large purchases
    If you’re eyeing a second home, dreaming of a vacation (Tuscany, anyone?), or thinking of purchasing a cottage or a boat, your home equity can help you get there sooner.
  • Unexpected expenses
    Leaky roof? Faulty furnace? There are times when the unexpected happens and access to your home equity can help you pay for necessary repairs.
  • Debt consolidation
    Sometimes it can be difficult to manage multiple payments when you have a few outstanding loan balances with high interest rates— such as credit cards and personal loans. The good news is your home equity can allow you to borrow money to pay off your existing debts with a single monthly payment and one interest rate.
  • Your child’s school tuition
    With the rising costs of tuition, you may want to help your kids with their expenses. Leveraging your home equity to help with tuition costs may be a good option.

    BMO has convenient, effective ways for you to access your home equity. Find the one that best suits your needs.

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