Are There Risks Associated With Refinancing A Mortgage?

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Are There Risks Associated With Refinancing A
Mortgage?
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• For Canadian homeowners on their first mortgage,
  the term mortgage refinancing might be a
  commonly heard one, and it refers to homeowners
  securing another loan to pay off their original
  mortgage.
• By securing a second mortgage with a different
  loan term (ideally a better one), and from the
  same lender or a different one, you can get a
  loan for as much as 80 of the original value of
  your property when purchased.
• Sound complicated? Well, it doesnt have to be,
  but it is important to watch out for risks, and
  while there are plenty of benefits attached to
  mortgage refinancing, there are some risks, too

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• Nothing comes for free
• There is no such thing as free refinancing, and
  while refinancing your mortgage might still be a
  good idea in the long term, its important to
  note that you will likely be required to pay a
  pre-payment penalty, which is typically the
  equivalent of 3 months of interest charges.
• Watch out when considering refinancing your
  mortgage, or you could end up paying more in
  penalties than the amount youll save from the
  lower interest rate.

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• You could end up in greater debt
• While you can pay off your high-interest debt by
  refinancing (sometimes referred to as debt
  consolidation), there is a catch involved. When
  you pay off your high-interest credit card debt
  and car loans with a refinancing plan, youre
  transferring your unsecured debt into your
  mortgage plan, which is backed by your home.
  Should you default on your payment at any time,
  you could stand to lose your home, as it would be
  classed as collateral.
• Not paying your credit card debt may be limited
  to giving you a bad credit score, but when you
  miss a mortgage payment, it can be as serious as
  foreclosure.

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• Longer durations
• The majority of mortgage plans last for 30 years,
  and when you refinance, you merge the old
  mortgage into the new 30 year plan. If you dont
  have many years left on your old mortgage and you
  refinance for a new 30-year-plan, you could end
  up paying higher interest rates overall not a
  good strategy for saving money.
• Also, for homeowners who dont plan to remain in
  their home long term, getting a longer mortgage
  term and having to break it early could cost you
  dearly.

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• As with any decision you make related to your
  finances, it always pays to seek professional
  advice and guidance, and you may find that an
  experienced mortgage broker can assist you and
  help you better understand the consequences of
  refinancing your mortgage.

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• Mortgage-broker-Calgary is your best resource for
  finding a mortgage for your property. Luke Wile,
  is one of the best mortgage brokers in Calgary
  and is proud to serve clients from across Canada,
  while being centered in Calgary, Alberta. Luke is
  proud to serve his clients with a personalized
  approach to finding his clients the best and
  lowest Canadian interest rates and terms offered
  by the major banks and private lending
  institutions. If you are looking for a 2nd
  mortgage in Calgary, with Luke Wile you can get
  fast and personal expertise for your mortgage.
  Contact us today!