Personal Finance

Refinancing or new mortgage dilemma

  • Last Updated:
  • Jul 10th, 2014 4:56 pm
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[OP]
Newbie
Nov 14, 2011
8 posts
TORONTO

Refinancing or new mortgage dilemma

Hello,

Three years ago I purchased a house for $400k, put 20% down and got a revolving mortgage for $320k. The 'mortgage' component is at prime minus 0.9% while the heloc component is at prime minus 0.5%. It's a five-year term so have two more years to go.

Based on recent sales on my street for houses that are similar to mine, I think my property value is now $525-550k. I was wondering what's the best way to access this additional equity:

Option 1: Break existing mortgage and apply for a new mortgage assuming the property value is higher. I'd have higher interest rate today than what I did three years ago. In addition, I'd have to pay penalties to get out of current mortgage, approx $2.5k.

Option 2: Apply for a second mortgage to access the additional equity. Assuming the current property value is 525k, at 65% I can only go up to $341k, which is only $21k more. Not bad but won't serve the purpose i need it for (renovations).

Option 3: Not touch the existing mortgage and just wait another 2 years.

I wish to use additional borrowing for renovations, and, hopefully have a tenant - $8k per year in rent approx. No other large debts to factor.

Any advice?
Thanks in advance!
2 replies
[OP]
Newbie
Nov 14, 2011
8 posts
TORONTO
Can the moderator please close or delete this thread? I think I accidentally posted twice. Thanks
Deal Fanatic
User avatar
Oct 5, 2007
5005 posts
1235 upvotes
Toronto
125k in 3 years ....... wow.

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