Refinance Home Loan

Cash-out refinance gives you a lump sum when you close your refinance loan. The loan proceeds are first used to pay off your existing mortgage(s), including closing costs and any prepaid items (for example real estate taxes or homeowners insurance); any remaining funds are paid to you.

Most people review their home loans every 2 years. While mortgages can be refinanced immediately in certain cases, you typically must wait at least six months before seeking a cash-out refinance on your home, and refinancing some mortgages requires waiting as long as two years.

With a standard rate-and-term refinance, you’ll need to wait at least 210 days from your original loan’s closing date. If you’re looking to take cash out with your refinance, you’ll need to have lived in the home for at least one year and made on-time mortgage payments for the last 12 months.

A refinance typically takes 30 to 45 days to complete. However, no one will be able to tell you exactly how long yours will take. Appraisals, inspections and other services performed by third parties can delay the process.

• • You pay the debts back at the rate of the home loan, not at the rate that comes with each debt. A credit card debt, for instance, can have an interest rate as high as 17%.

• • You can consolidate up to about five different debt facilities.

• • You won’t get hit with the fees associated with credit cards and personal loans.

• • You actually pay back a smaller portion for these smaller debts because you’re paying a lump sum on a monthly basis.

• • Instead of trying to manage your payments to several different lenders and credit providers, you can combine all of these into one easy, monthly payment.

• • Borrow up to 90% of the property value: You must have a clean credit history and all of your repayments need to have been paid on time.

• • Borrow up to 80% of the property value: You can have missed payments recorded on your file but you need to show that you’ve been making your payments on time for the last 6 months.

• • Borrow up to 75% of the property value: Your borrowing power will be limited if you have serious credit impairment.

If you have a bad credit rating, your lender may deem you a high-risk applicant. If your rating is terrible, they may outright refuse your application, but in most cases, they will offset the risk of the debt refinance by offering you higher interest rates.

• Discharge fee: Your current lender will charge you a fee to exit the loan contract, which is usually around $300 or $400.
• New application fee: The new lender may charge a fee for the paperwork, usually around $500. Some lenders won’t charge anything in order to secure your business.
• Mortgage registration fees: This state government fee to register a new mortgage is usually around $100.
• Insurance fee: If you purchased your home with a deposit less than 20%, the original lender would have charged you Lenders Mortgage Insurance. Your new lender could charge you this fee again, which could be tens of thousands of dollars. This is important to ascertain at the start of the process.
• Early exit fee: You signed a contract, so there will be a fee to break that. Known as an early exit fee, this fee, also known as a ‘break fee’ will be determined by how long you’ve been with the lender.