ELI5: Re-Financing

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Feb 17th, 2017 3:09 pm

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Feb 17th, 2017 11:45 am

hyph3n [OP]: Member; Apr 20, 2011; 369 posts; 66 upvotes; Toronto

Feb 17th, 2017 11:45 am

ELI5: Re-Financing

I need to understand how does it work.

I got a condo which was $270K, I have been paying its mortgage for almost 5 years and now the mortgage is down to $240K. The current condo price is around $310. I have few debet's which are driving me crazy. Even though I am able to handle them with my salary but any unexpected expenses would be unmanageable for me. So thats why i was thinking to do a refinance, get the debt pay off and will see how it goes from there.

But what someone told me that in case of refinance i will be putting down 20% towards condo downpayment. If this is the case, then I will be barely left with $1000 - $3000 which are nothing for my debts.

Can someone explain re-financing to me?

Thanks

3 replies

Feb 17th, 2017 12:51 pm

valuemortgage: Deal Addict; Dec 1, 2015; 1967 posts; 920 upvotes; Etobicoke, ON

Feb 17th, 2017 12:51 pm

How did you determine that $310k value? Comparables in the same building? Recent units sold? Municipal assessment? The lender would do an appraisal to determine the current value, and you can refinance up to 80% of that value. So your logic is correct, but you need to make sure you are using the correct property value in your calculations.

Andre Oliveira - Mortgage Agent at Valuemortgage
2018 Top 20 National - Mortgage Intelligence
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Feb 17th, 2017 2:45 pm

theguyz: Deal Addict; Dec 12, 2006; 4345 posts; 562 upvotes; Messed Up Area

Feb 17th, 2017 2:45 pm

The key to the refinance is the lenders appraisal. You can refinance 80% the appraisal.

As well with refinance you are looking at lawyers fee ( $800ish ) + appraisal fee ($3-400 ) + penalty breaking current mortgage ( dependant on terms and length but if your 5 years in maybe ok )

So lets say you owe 20 k debt, your condo would need to be appraised at 325k ( 80% = 260k = 240k owed + 20 k debt )

With rates now at low rates, from 5 years ago, refinancing without your debt may save you 100's which could go towards debt monthly.

Talk with a mortgage broker and see where you fall, as they maybe able to find you a solution.

Feb 17th, 2017 3:09 pm

Jeremyl007: Member; Aug 16, 2011; 368 posts; 235 upvotes; OTTAWA

Feb 17th, 2017 3:09 pm

Where did you come up with the lawyers fees of 800? I was just at a CIBC branch just yesterday and was asking about refinancing my mortgage. They are offering 2.29% regardless whether I'm a new customer, refinance, renewal, high ratio, low ratio, >$1M value house, etc. They mentioned $550 would be their legal fees and they could look at in waiving.. for sure they would be able to waive my $300 appraisal.

On top of this, there is a discharge fee of $300 that I am ready to pay. Are there any additional costs for refinance or is this it? And is what the FA told me true regarding they don't discriminate on the rate for any of the criteria I mentioned above?

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