Refinancing is defined as replacing an old debt with a new one. It entails paying off the old loan amount with the new loan proceeds. Refinancing is usually done by taking new loan of the same size, and with same collateral obligation, but reduced burden (in terms of reduced rate of interest or less monthly payment burden on the borrower).
Reasons for refinancing
- To reduce the monthly repayment amount
- To switch from flexible to fixed monthly payment
- To repay with the best monthly repayment plans available
- To amalgamate different debts under one repayment plan
- Shortening of loan’s term – Usually done at the time of falling interest rates.
What procedure refinancing involves?
The process is just like opting for a new loan, with the lender assessing and analyzing all the key information about the borrower and processing full documentation for verification:
- Credit history & credit score
- Employment & income status
- Assets verification and evaluation
- Current valuation of the collateral
What to consider when applying for refinancing?
The borrower must consider & weigh the savings he/she may gain in interest, against the refinancing associated fees. This is done by calculating the total cost and margin between the current mortgage repayment fees with the up-front money expenditure.
When to refinance?
You have to weigh in certain factors related to your current debt, like loan terms, interest rates, and repayment fees and penalty related with the current mortgage. One thing must be remembered positively – you are not clearing your debt, just restructuring it to suit your payment condition.
After realizing these factors, you need to take the right the right call at the right time.
For a favorable refinancing process, you must keep check of your credit score, and try to make it as healthy as possible.
Types of Refinancing
There are typically two types of refinancing plans:
- Standard refinancing (Plain Villa): In this refinancing term, you obtain loan amount similar to your current loan.
- Cash-out Refinancing: This refinancing involves greater amount of money than the previous loan. Cash-out involves higher interest rates as you have obtained more money. The difference between the two loan terms is taken out in cash.
Refinancing in Canada
Refinancing in Canada can be a bit daunting concerning all the documentation, evaluation and structure process if you are not prepared fully regarding all the factors and points. If you are even in 1% doubt then it’s better to consult an expert as a slight error might prove to be a big mistake in the long run.
Golden Financial Services – Refinancing Consultation
With our proficiency, in-depth knowledge of the process and high experience, we are well placed to provide reliable, transparent and adept resolution to worried borrowers. We are skillful in guiding and helping clients get approved financing at the best rate possible and with the most suitable repayment plan, with equity extractions and secured debt transaction.
The expert financial advisors and consultants are well-informed with the latest developments in the domain and provide proactive, precise and professional advice to help borrowers structure their financing in desirable manner & plan their future with positivity and hope.
Our practiced & comprehensive service includes:
Mortgage refinancing up to 100%
Best loan term plan at lowest interest rate or with shortened time period (specific to the requirement)
Easy and hassle-free consolidation of multiple debts and mortgages
Up to 95% loan financing for self-employed clients
Take the right step towards better repayment and financial management – Move towards a happy and worry-free life!
Call the Golden Financial Services consultant for professional and trustworthy advice!