It’s usually around this time of year that you start hearing the words “refinancing” and “mortgage” in the same line – but what exactly does that mean? And, more importantly, is refinancing something that works to your advantage?

What is refinancing?

To put it simply, when you refinance your mortgage, you’re convincing your lender to pay off whatever is left on the original loan and give you a new one (with better terms, preferably).

People usually start looking to refinance their mortgage when they are unsatisfied with the terms of their original agreement. For example, many home buyers purchase their home when the economy (and housing market) is doing well. However, a strong economy usually also translates to higher-than-usual interest rates, prompting refinancers to go shopping as the rates do drop. Other reasons include wanting to lock in a better fixed rate or changing the length of one’s payment terms.

Buyers be warned…

Keep in mind that in certain situations, refinancing your mortgage won’t always save you money as there can be costs associated with breaking a mortgage and acquiring a new one. For example, with most financial institutions, leaving a mortgage before its term is completed will likely incur a penalty.

Sounds like a bit of a catch-22 situation, right? You’re looking for a better agreement because your current terms aren’t ideal but there’s a chance you might be penalized for making a change.

Fortunately, there is a solution. The Interior Savings Blend and Extend program allows our members to renegotiate their rate without paying a penalty. With just a small flat fee, we can complete this without legal or re-registration of the mortgage.

Always check with a professional

Today’s mortgages are more of a program than a product, and are designed to be flexible to accommodate an individual’s borrowing needs. Always take the time you need with your mortgage provider to crunch the numbers, look at your options, share your goals and work out the right solution. If you’d like to take another look at your mortgage and reassess how it fits with your life, visit us at one of our many branches today. Better yet – contact a member of our Mortgage Team and let us come to you! Our specialists provide advice on everything from refinancing to construction mortgages to new developments, all at your convenience.