Your mortgage may be among the largest and most significant investment opportunity you make throughout your life. And in many ways, it can also assist you in achieving your long-term financial objectives. A popular method to expanding and reaching financial goals sooner amongst Canadian homeowners is refinancing their homes. With that being said, refinancing your mortgage can be a daunting endeavour that may not be the best option for everyone. Therefore, if you want to learn more about whether or not refinancing your home is a good course of action for you, we’ve put together a list of ways it can assist you in making sound financial decisions with your home’s equity.
What does it mean to refinance your home?
A mortgage refinance is a method in which you obtain a new mortgage in order to ultimately pay off your existing mortgage. As a homeowner, you will be able to select from a variety of mortgage options that are available to those who are looking to purchase a home.
Is refinancing your home a good idea?
There are many options available for homeowners when it comes to refinancing their homes. Let's take a closer look at why you may opt to do so in more detail below.
To lower your monthly payment
If you’re having difficulties paying your monthly mortgage payment, it may be beneficial to extend your mortgage term. By doing so, you’ll be able to lower your monthly payment and have more money in your pocket at the end of each month for other financial goals.
To invest in a home renovation
Another reason you may want to refinance the mortgage on your home is to invest in a home renovation project that will improve and add value to your real estate property. Since cash-out refinances typically have lower rates of interest than most credit cards, using the equity in your property may be preferable in deciding to whether refinance the equity in your home or to withdraw funds from your credit card, which may charge your fees and a very high interest rate.
To consolidate your debt
Furthermore, if you have other personal debts that are lowering your credit score, using the equity in your home to pay off these loans can help you improve your credit score and move forward financially.
To put more money in your retirement savings
The concept of compounding interest is among the most effective tools you can use when it comes to retirement savings. The sooner you begin investing and saving, the more decades you have to accrue interest on your investment opportunities prior to actually retiring.
Final Thoughts
As you can see, refinancing your loan can be beneficial for many homeowners. Therefore, if this is something you are considering, we suggest reaching out to your financial advisor or mortgage broker for more information on whether this is something that can help you improve and reach your financial goals and investments.
