Equity can fix a cash-flow problem or just push it down the road. Rolling debt into the mortgage cuts the payment, sure. But a three-year balance spread over twenty-five years costs more in total interest.
Work out what it really costs
Put the penalty, the fees and the new term next to the monthly saving. Divide the penalty by that saving. If the answer is bigger than the months left in your term, you lose money on the move.
Think about the next renewal
The payment has to hold at the next renewal, not only today. Ask what it becomes if rates are higher when the new term ends.
Documents to gather
What the lender will ask for.
Current mortgage balance
Value of the property
Debts or project to finance
Mortgage penalty
New payment
Equity available
Frequently asked
Which documents should I gather?+
Your last two notices of assessment, recent pay stubs, an employment letter, three months of bank statements and proof of your down payment. Add a list of your debts, with balances and monthly payments. Have it all ready before you make an offer and a short financing window is realistic.
Current rates
Today’s rates, with the fine print.
These rates are indicative. Yours depends on your file, the type of mortgage (insured or not) and the lender. And look at the penalty too, it matters as much as the number.
Buying, renewing, refinancing, or something a bit out of the ordinary: tell us where you’re at, even if it’s still fuzzy. Mathieu gets back to you with next steps and the documents to pull together.
