Home owners in Toronto are now refinancing their mortgages at a record pace. As of January 2009, the Bank of Canada has dropped it's overnight lending rate substantially, allowing banks and mortgage lenders to offer a prime rate of 3%. Both fixed and variable rates are at historical lows and well below the average mortgage interest rates of the last few years. Many consumers are willing to pay penalties charged by their bank or mortgage lender to refinance existing mortgages and take advantage of lower payments and reduce interest costs on all of their debts.
Toronto and GTA areas in the last 5 years have seen a frenzy of buying activity. Home prices increased rapidly, allowing more and more equity to build up. Mortgage refinancing is one of the best options to make use of existing equity and pay off debts such as higher interest mortgages, credit cards and personal loans. By lowering monthly mortgage payments and reducing payments on unsecured debts such as credit cards, home owners can use the extra monthly cash flow to pay down their mortgages sooner using pre-payment priviledges offered by most lenders in Toronto. Another popular strategy is using low interest mortgage rates and a mortgage refinance to fund renovation projects to increase property values.
To begin the refinancing process, first contact a mortgage broker to discuss your existing mortgage and personal financial details. A mortgage broker will review with you how much money can be saved in total interest costs by refinancing, as well as give you a plan for paying down your mortgage sooner. Mortgage brokers in Toronto have access to over 40 lenders and can provide you with not only the lowest mortgage rates but also a variety of mortgage products tailored to your needs. In most cases, a Toronto mortgage broker will be paid by the lender chosen to fund your new mortgage refinance with, therefore not charging you any broker fees.
To qualify for a mortgage refinance in Toronto, your credit score is the most important factor. Banks and mortgage lenders are looking for FICO scores in the 620 plus range on average to qualify for the lowest mortgage rates . The higher your score, the better chance you will have to be approved at low rates. Other important qualifying factors will be your income & employment history as well as your loan to value ratio. Currently, you can refinance up to 95% of your homes' appraised or market value.
In Toronto and the GTA, a typical mortgage refinancing can be closed in approximately 14 to 21 business days. A real estate lawyer will be required to close the transaction. The average cost of legal services in Toronto is around $800, depending on the number of disbursements and other related fees.
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