Refinancing refers to the process where owners of real estate renegotiate the terms of their existing mortgage, with a view to registering a new first mortgage or line credit against title to their property or obtain second mortgage financing.
Individuals refinance for a number of reasons:
i) they want to borrow against the equity in their homes;
ii) consolidation of existing, non-registered debts, such as credit card debit or personal line of credit debt; or
iii) negotiating a better interest rate for their mortgage, with a different lender.
You may want to read NLPC’s ‘Six Factors to Consider Before Contacting a Private Lender’ white paper, which provides additional details about private lending and the need to have a lawyer involved at all steps of a private lending arrangement, and especially prior to engaging with private lending.
In all circumstances you will require a lawyer to act on your behalf to discharge the existing mortgage, register the new mortgage and pay out funds as directed by the lender.
A new trend for refinancing one’s home is to obtain a Home Equity Mortgage. A Home Equity Mortgage is a form of mortgage that is not required to be paid back until the property is either sold or the mortgagor (the borrower) passes away. The lender will still charge an interest rate against the monies borrowed, which will accrue over time, until the mortgage becomes due.