Mortgage Refinancing: Know Your Options
The recent Bank of Canada interest rate hikes and current economic uncertainty have prompted many individuals to look into their mortgage options. Whether you’ve recently purchased a home or are close to completing your mortgage repayment, your mortgage has likely been at the forefront of your mind within the last few months.
The following are answers to some of the most commonly asked questions about mortgage refinancing:
What happens if I can’t make my mortgage payment?
Failure to make an interest payment or a payment on the mortgage’s principal amount could be a monetary default. If a monetary default is not corrected within a specific timeframe, subject to the procedures laid out in the Mortgages Act, the lender is entitled to the remedy options of Power of Sale or Foreclosure.
When the lender initiates a Power of Sale, they will force the sale of the property and use the funds to satisfy the debt of the mortgage. If the lender chooses to proceed with foreclosure, the lender will take possession and title of the property to satisfy the debt.
What happens if I make a partial mortgage payment?
A partial payment may be considered a monetary default, depending on your mortgage agreement. If you feel that you cannot make a full mortgage payment, you should seek financial and legal advice.
What does it mean to “refinance” a mortgage?
When you refinance your mortgage, you replace your old loan with a new one. Individuals will commonly refinance their mortgage in order to lower their monthly payments, convert their variable rate to a “locked-in” fixed rate, pay off their loan sooner, or take out existing equity from the property.
Since the refinancing of a mortgage involves an entirely new agreement with new terms, the lender will likely reassess the individual’s financial situation as they would have with the original mortgage agreement.
Do I need to hire a lawyer?
If you are looking into your mortgage options, hiring a lawyer is always a good idea. A lawyer can help you avoid any surprises and assist you by:
- Understanding your mortgage terms
- Helping you navigate your options and understand your choices
- Advising you of the consequences and procedures on default
- Protecting you from mortgage fraud
If you are weighing your mortgage options or you would like to review your existing mortgage documents, please contact one of our mortgage experts today. We would be happy to assist you!