Mortgage Blog

Mortgage Refinancing in Calgary Alberta, Canada: A Comprehensive Guide

April 30, 2023 | Posted by: John Antle - Trusted Calgary Mortgage Solutions

What is Mortgage Refinancing?

Mortgage refinancing is the process of replacing your existing mortgage with a new one. The new mortgage may have different terms, such as a lower interest rate, a longer or shorter amortization period, or a different payment structure. Refinancing is often used to take advantage of lower interest rates, but it can also be used to access equity in your home or change the terms of your mortgage.

Types of Mortgage Refinancing

Rate-and-Term Refinancing

Rate-and-term refinancing is the most common type of refinancing. It involves replacing your existing mortgage with a new one that has a lower interest rate or a different term. This type of refinancing is usually used to lower monthly mortgage payments or to change the terms of the mortgage.

Cash-Out Refinancing

Cash-out refinancing is a type of refinancing that allows you to access the equity in your home. It involves replacing your existing mortgage with a new one that has a higher balance than your current mortgage. The difference between the two mortgages is paid out to you in cash, which you can use for any purpose you like. Cash-out refinancing is often used to pay off high-interest debt, make home improvements, or invest in other properties.

Second Mortgage Refinancing

Second mortgage refinancing is a type of refinancing that involves taking out a new mortgage on your home while keeping your existing mortgage in place. The new mortgage is usually a second mortgage, which means it has a higher interest rate than your first mortgage. This type of refinancing is often used to access equity in your home without paying off your existing mortgage.

Costs of Mortgage Refinancing

Mortgage Penalty

If you have a closed mortgage, you’ll likely have to pay a mortgage penalty to your lender if you refinance before your mortgage term is up. The penalty can be significant, so it’s important to factor it into your calculations when deciding whether to refinance.

Appraisal Fee

Your lender will likely require an appraisal of your home before they approve your refinance. The appraisal fee can range from $300 to $500, depending on the size and complexity of your home.

Legal Fees

You’ll need a lawyer to help you with the refinancing process. Legal fees can range from $500 to $1,500, depending on the complexity of your situation.

Discharge Fee

If you’re switching lenders, you’ll likely have to pay a discharge fee to your existing lender to remove the existing mortgage from your property title. This fee can range from $200 to $400.

Other Fees

There may be other fees associated with your refinance, such as title insurance, registration fees, and taxes. Make sure you understand all the fees involved before you decide to refinance.

Benefits and Drawbacks of Mortgage Refinancing

Benefits of Mortgage Refinancing

• Lower monthly mortgage payments
• Access to equity in your home
• Consolidation of high-interest debt
• Flexibility to change the terms of your mortgage
• Potential savings over the life of your mortgage

Drawbacks of Mortgage Refinancing

• High upfront costs
• Potential for higher interest rates
• Potential for longer amortization periods
• Potential for higher total interest costs over the life of your mortgage
• Risk of losing equity in your home

Conclusion

Mortgage refinancing can be a great option for homeowners in Calgary, Edmonton and across Alberta who want to lower their monthly mortgage payments, access equity in their homes, or change the terms of their existing mortgages. However, it’s important to understand the costs involved. I can work with you to help determine your exact needs so please feel free to contact me today.

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