3. To Acquire Funds

Besides debt relief, refinancing offers you the opportunity to access your home equity to fund expenses like home renovations, a down payment for a second property, or investment funds. Alternative reasons to refinance are, but limited to, stock investments, health costs, emergency funds, traveling, weddings, toys, and more.

It’s important to not confuse refinancing with mortgage renewals or HELOCs.

While sometimes thought of as the same, refinancing is very different from renewals and HELOCs. These financial options can help you change your debt situation and cover new expenses but aren’t the same as refinancing. Let’s look at them a little closer to see the differences.

Mortgage renewal: Upon the completion of your mortgage contract, also known as your maturity date, you are able to renew your current mortgage and set new terms and rate. During the renewal period, you can negotiate a new term and interest rate based on the pending mortgage amount with your lender. While your lender will almost always offer you a below average offer upfront as your maturity date approaches, it’s important to speak with your trusted mortgage professional to seek all the market’s best options available to you.

HELOC: A HELOC or home equity line of credit is a different way of tapping into your home equity. It requires an appraisal and the same amount of paperwork as refinancing before funding is approved. But, unlike refinancing, the interest on a HELOC is much higher. Also, with a HELOC, you can’t access all of your home equity at once. You can borrow a specific amount at a time. That being said, refinancing is a better option if you’re looking to consolidate debt instead of spending it.

If you’d like to learn more about what refinance options you may have, reach out to us today at Riley Boychuk Mortgages and we’d be happy to help.