Refinancing your mortgage is done for a number of reasons. The most common are due to renovations that are wanted and the financial resources aren’t immediately available, or for the purpose of consolidating debts. Using the equity in the home is also a great way to leverage your investments or to buy an investment property. Not to mention that many use the equity in their home to buy a cottage, or a vacation property in the U.S.
With the accumulation of equity in the home, it represents an opportunity to borrow from yourself at rates that are lower than what you would generally pay for an unsecured loan or line of credit, and in larger amounts. If you carry a large debt load, this could represent hundreds of dollars or more in cash flow savings by consolidating balances, not to mention the thousands of dollars in interest that could be saved.
Large renovation projects generally require more funds than most families have immediately available so it is usually easier to add the cost of a renovation project to a mortgage. Adding $25,000 to a mortgage for the cost of a new kitchen is easier to do as a $150 per month increase to a mortgage payment versus finding the funds in the family budget to pay for it cash.
There are different ways to finance these projects and using the assistance of a good mortgage broker can help you to better understand the pros and cons of these options.
If you’re giving some thought to a large renovation project, or want to reduce the stress of many credit card bills, then it’s definitely time you had a conversation with Lee and he’ll review the various factors to consider when making these decisions and help you come up with a strategy you can be happy with.