Taking Care of Your Financial Affairs

This term generally describes the process of rearranging your financial affairs. By refinancing, you may be able to complete a few projects around the house, consolidate loans, maximize your RRSP or finally buy that new car.

By refinancing a number of smaller debts and consolidating them into one larger loan, it typically makes it easier for you to budget and pay all of your bills. Instead of having to make many payments to a number of different creditors, you simply make repayment to one financial institution after it has "paid-out" the other creditors. You typically save on interest charges by doing so.

These "loans" can be structured very differently, according to your particular needs. Depending on your credit history, the amount of money involved and the use you have for it, your interest rate may be quite competitive. The kind of refinancing you choose as well as the security you give in return for the loan will also affect what rate of interest you can qualify for.

Your lender will suggest a number of alternatives when discussing your refinancing needs. Each option will have a specific name to identify the kind of refinancing contemplated. Your lender, for example, will explain the difference between an "unsecured line of credit," an "open, variable-rate mortgage" and an "equity take-out." And that’s just the beginning!

Be sure to ask which option will work best for you. Repayment schedules and interest rates differ from one refinancing vehicle to another. Depending on your needs, you may want to give your home as security for the loan. This quite often will get you the lowest rate. If you are giving your home as security, you will normally need or want a lawyer to assist with the refinancing option you’ve selected.