How much can you consolidate your debts?

 

 

If you are an owner, you can use the equity (or equity) of your property to consolidating your mortgage loan. The liquidity thus obtained could allow you to realize various projects like … a refinancing of your debts .

Did you know that, according to the professionals , last year alone, about 10% of Canadian homeowners refinanced their mortgages for an average of $ 49,000?

So, if consolidating your mortgage loan is an interesting avenue for you, the first step is to determine how much you can claim.

In Canada, the maximum you can access is 80% of the equity in your home.

 

Calculating the amount from your loan consolidation

The equity value of your property is the difference between its current market value and the outstanding balance on your mortgage.

 

Scenario

Market value of your home: $ 250,000

The balance of your mortgage: $ 75,000

Maximum Loan / Value Ratio in Canada: 80%

 

The calculation of maximum loan consolidation :

Estimated market value x loan / value ratio

$ 250,000 x 80% = $ 200,000

 

The calculation of the amount you can dispose of on the net value of your property :

Limit of your refinancing – your mortgage balance

$ 200,000 – $ 75,000 = $ 125,000

Even if consolidating your mortgage loan gives you access to $ 125,000, if your total debt does not reach this amount, you do not have to add this amount to the balance of your current mortgage. You can borrow only a fraction of it.

 

When to consolidating your mortgage loan to pay your debts? Mortgage penalty

You can manage your debt from the equity of your property at any time . However to access this capital, various fees will be applied. For example, you will have to pay penalties if you terminate your mortgage early, before the end of your term (usually 5 years).

It is important to use a mortgage broker to assess whether loan consolidation to pay off your personal debts is good for you, especially if your loan has not expired.

A certified and seasoned professional will help you make an informed choice by calculating the costs of your mortgage refinance . It will take into account, among others, the:

  • Assessment fees of your house to know the market value
  • Mortgage penalty fee if your term is not completed
  • Fees for opening and studying your file
  • Legal fees (notary) if the amount of refinancing is higher than that of your original loan
  • etc.

On the other hand, by negotiating for you an interest rate lower than your current rate (fixed or variable, as desired), your mortgage broker could save you interest on your new loan, which would be a plus.

In addition, you could extend the amortization period of your new loan to reduce the amount of monthly payments.

Feel free to fill out the bid solicitation form on this page. In no time, the best mortgage broker in your area will contact you to offer you the best offers among 20+ financial institutions, lenders, banks, investors, trust companies …

Save time and money by using a professional, specialized broker who has previously shopped for you the loan consolidation products with the optimal conditions (term, early repayment, payment …) at the best interest rate (wholesale price) .

 

Concrete Example of Calculating a loan consolidation to Manage Your Debt

What is the limit of the loan that a financial institution will give you?

Amount to which your property has recently been assessed on the market $ 350,000
Amount you have to pay on your mortgage (balance) $ 150,000
Maximum value allowed for consolidating your mortgage loan 80%

 

Calculation of your borrowing limit $ 350,000 X 80%

(Market value X Maximum allowed value of your property for the loan)

$ 280,000 – $ 150,000

(The result obtained – The value of your mortgage balance)

$ 130,000

($ 350,000 x 80%) – $ 150,000

$ 280,000 – $ 150,000 = $ 130,000

Calculating your new mortgage

(if you use the full amount available)

$ 150,000 + $ 130,000 = $ 280,000

(Balance your 1st mortgage + your new loan)

By doing a mortgage refinance, you could borrow an additional $ 130,000, which would increase your mortgage balance up to $ 280,000.

Various types of mortgage refinance products are offered in the market. However, an interest rate associated with a mortgage loan is much more advantageous than that of a personal loan, since it is secured by the value of your home.

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