Refinancing Your Home Mortgage
There are often many advantages to refinance your home mortgage early:
- A refinance will often lower your monthly mortgage payments
- Refinance to a lower cost of borrowing
- Pay down your mortgage faster by lowering the interest rate but keeping your payments the same
- A mortgage refinance can allow you to take equity out for debt consolidation, investments, vacation
- Refinance investment properties for better cash flow
- Refinance multiple mortgages (first, second, third) to a lower first mortgage rate
It is a good idea to contact your current mortgage holder first to find out the exact penalty for breaking your mortgage early. There will often be a 3 month interest penalty or an IRD (interest rate differential) calculation for breaking your mortgage. The penalty can often be incorporated into the new mortgage. The exact cost will depend on how your lender calculates the fee (IRD versus 3 month penalty), your interest rate and the length of time left on the mortgage. See IRD calculation.
Save Money On Your Break Fee: Most lenders offer an annual prepayment option in their mortgage however they seldom incorporate this prepayment privilege in the early termination fee. Be sure to request from your lender that they exclude the amount allowed to you each year as a prepayment privilege from the calculation. When you refinance, what you are doing is prepaying your entire mortgage, they should not penalize you for the prepayment amount allowed to you.
If you are considering a home mortgage refinance, call today or apply online. I would be happy to help discuss your options.