Mortgage Refinancing Ontario PPS Law
Mortgage refinancing refers to renegotiation of an existing mortgage loan agreement to consolidate debts or to reuse available equity in the property to increase mortgage loan amount for larger expenses. It may also be an effective way of avoiding prepayment charges associated with closing a mortgage. It widely used for debt consolidation, home renovations and investment purposes.
While it is an effective use of one’s equity in their home to consolidate their debts or to lower their interest rate, it is, at the end of the day, an increase in one’s borrowing commitment and the time at an additional cost and/or charge.
A refinancing is different from renewing a mortgage with the current lender. In renewing a mortgage there’s scope for renegotiating interest rate and term without the requirement for reapplying. Whereas, in refinancing, the existing mortgage is paid out and a new mortgage loan agreement is negotiated.
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