Navigating a Mortgage Refinance: How a Lawyer Can Help

When you’re refinancing your mortgage, you might not know if a lawyer is required. Or you might not know what options are available to you when refinancing. Read on to find out more about when you might consider refinancing your mortgage or loans.

What does it mean to refinance my mortgage?

Although most mortgages in Canada have a 25 or 30 year amortization period, most people have a mortgage contract term of five years or less. This can vary depending on what best fits your situation at the time you need to borrow money. Let’s say, for example, you purchased a property five years ago. The mortgage term is coming to a close, and you still owe money on the property. It’s worthwhile to explore what lender options or banking terms of the loan are now available to you.

There will be many things to consider, for example, you might be in a better or tighter financial position. Or, perhaps a different lender is now offering a different loan rate or condition that you want to take advantage of. Or, it might be that you want to release some of the equity you’ve built up in your home to pay for something else.

Changing your mortgage is known as a refinance. You replace the mortgage you currently have with a new mortgage term, and with new terms and conditions. The new mortgage might be with the same lender, or with a new lender.

What happens in a refinance?

When you refinance your mortgage, you agree with a lender to the terms and conditions of your new mortgage. Upon closing, the lender will pay out your existing mortgage in full, and then register the new mortgage on the property.

Why should I refinance?

It’s worthwhile to consider refinancing your mortgage if your financial position has changed since you first got your mortgage. For example, if you received a significant pay rise and are now eligible for a better mortgage, you might want to consider paying down your mortgage faster.

When interest rates are on the rise (like they are now), you could refinance, or change the terms of your mortgage, to lock in a fixed interest rate. Depending on your situation, locking in a fixed interest rate could provide more stability in your budget planning.

Given that our home is the biggest investment most of us will make, people generally want to refinance their mortgage to get the best deal available. But there are other situations too where refinancing can add value, like:

  • Buying out a co-owner of the property, such as in a divorce
  • Drawing on equity to renovate the property, or to make another significant purchase
  • Consolidating debts to save on administration costs and rate fees
  • Reducing or changing your repayments to pay your mortgage down faster

Do I need a lawyer to refinance my mortgage?

Whether you use a lawyer is up to you and your lender(s). Some lenders may require you to use a lawyer if you’re changing from one lender to another.

Here at One80 Law, we’ve dealt with a lot of refinances. We recommend working with a legal expert so that your property interests are protected. In a refinance, we:

  • Review all documents, including lender instructions
  • Explain documents to you and answer any follow up questions
  • Prepare mortgage documentation and complete all mortgage requirements to enable funding of the loan
  • Liaise with your lender or lenders for closing of the refinance

We also carry out due diligence by searching your property title to make sure you’re eligible to refinance the property. This will save you time and worry down the line as it comes to the closing of the refinance.

You’ll want to have a lawyer in your corner to guide you through this process to ensure it all goes smoothly, and you get the best outcome. Speak to One80 Law today about your refinance plans, and we’ll walk you through your options.