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.
Getting Everything Settled
Your lawyer will act on behalf of you and your financial institution by preparing the mortgage documentation according to the instructions they receive from your lender. In most cases, you will meet with your lawyer after you have already met with your lender.
Specific details such as the mortgage amount, interest rate and repayment options will be explained to you when the documents are signed at the lawyer’s office. The lawyer will also review the rights and obligations of each party under the agreement and, if you find them acceptable, you will be asked to execute the document under seal with your signature.
Clients are occasionally a bit surprised at the whole process. The thought of having to see a lawyer to get a loan isn’t usually first and foremost on your mind when all you are trying to do is renovate your basement. But if your lender wants security in a property in return for the loan, then your refinancing needs will normally involve the preparation of a mortgage by a lawyer.
In addition to preparing a mortgage, the lawyer will ensure the security offered is properly in place prior to any release of funds from your lender. The lawyer may also be responsible for “paying out” other creditors such as credit card companies, but usually your lender will deal with those matters directly.
If your lawyer has been instructed to pay out various creditors, they will attend to these matters in a timely manner once the registration process at the Land Titles Office is completed.
Once the registration process is finished, your lawyer will provide you and your lender a copy of your new Title proving that the lender’s security is properly in place. The lawyer will also confirm that all other creditors have been paid out as instructed.
It will cost approximately $550 – $750 in legal fees, plus tax and disbursements of about $225 to prepare the mortgage documentation, meet with you to discuss your legal obligations under the lending agreement, complete the registration and reporting process and attend to the pay out of encumbrances, if required.
There are additional costs of $25.00 per item to be paid out by our office from the mortgage proceeds.
You may be asked to provide your lender with a Surveyor’s Certificate for the property as a pre-condition of obtaining the refinancing. If you do not have one or it is not current, the cost to obtain one is approximately $1100 if the property is located in Regina. Alternatively, you may have the option of purchasing Title Insurance for a cost of $150.00 .