In today's low rate market, it almost seems automatic that clients should be breaking their mortgage if looking to access equity in their home. With that being said, their are many times refinancing your mortgage doesn't necessarily make sense and we have some solutions so that you can still access your equity.
When refinancing a mortgage to access equity doesn't make sense:
1. Low rate mortgage already in place. We have seen numerous clients considering accessing equity in their home. We then review their mortgage statement and see a low variable rate mortgage netting out sub 2% interest rates and at times as low as 1.45%.
2. Another reason not to break a mortgage is when the penalty is too expensive to make the interest and cash flow savings beneficial. With the big change in interest rates many mortgage penalty calculations are resulting in large penalties.
3. Sometimes clients want to qualify for a refinance to access their equity but they just don't qualify. This tends to happen to a lot of clients that are business for self not filing as high personal income tax but have the revenue or deposits to debt service the mortgage.
Ways to access equity without refinancing
1. Collateral Charge - It is technically a refinance when we put in place a home equity product. In this circumstance though we are not refinancing the mortgage we are leaving the mortgage as is but adding in the collateral charge if not in place to add a segment. We keep your existing rate and add in this second component in the form of a line of credit or locking in a low interest rate and provide our clients up to 80% of their home value minus the outstanding mortgage balance.
2. Equity Line - Our equity line products are non traditional in nature and not priced as competitive as a collateral charge but doesn't solve the problem business for self clients face or clients with bruised credit or can't fit within the lending criteria of the big banks. This product allows us to provide equity on a revolving line of credit up to 80% of the value of the property without having to break the existing mortgage.
3. Private Loan - We have access to private capital for straight equity deals in which it makes sense to access equity but you don't qualify for either option above. Even still it may make sense if it helps solve a life event, debt consolidation or home improvements. In this case we can go up to 85% of the home value and provide lending without meeting traditional lending guidelines.
For more information on how we can help access equity through a refinance or in these examples without refinancing your existing mortgage email
scott@thewestlaketeam.com