Thanks to its partnership with the Cooperative of Notaries in Quebec, the Desjardins Movement offers its members a more economical way to refinance their mortgage, without the need to physically meet a notary and incur higher costs.
An Optimal Solution for Many Borrowers
Mortgage refinancing can be an optimal solution for many borrowers looking to undertake significant projects, consolidate debts, or buy out a share of property during a divorce, for example.
However, before seeking mortgage refinancing, it's essential to assess your financial situation with a Desjardins financial advisor to determine the most suitable refinancing solution for you. Everyone is unique and evaluates their needs differently.
To benefit from the services of the Cooperative of Notaries in Quebec, including all the legal documents produced, you must be a Desjardins member.
But first, what is mortgage refinancing?
Mortgage refinancing involves renegotiating your mortgage loan when it comes to term, including its new applicable interest rate for the next payment cycle (often five years). Additionally, the loan can be increased by the amount you need.
Mortgage refinancing can be requested for various reasons, such as consolidating debts or funding significant projects like renovations. It involves leveraging the net value of your property to determine the amount you could be granted when refinancing your mortgage.
Determining Your Property's Net Value
Your property's net value is based on its current market value and the amount of your loan balance, i.e., what you still owe on your mortgage loan. By subtracting your outstanding balance from your property's value, you obtain its net value.
Unlike banks, which can only use 100% of a property’s value when taking the mortgage guarantee, Desjardins grants you up to 120% of this value.
For example, if you obtained a $150,000 loan with Desjardins in 2012 when your property was valued at $200,000, and its current value is $300,000, you don’t need to see a notary to change your mortgage if your refinancing needs are less than $240,000. In other words, based on your mortgage guarantee, Desjardins could offer you a loan of up to $240,000, which is 120% of your property value in 2012.
Why Refinance a Mortgage?
Many people decide to refinance their mortgage for various reasons. For some, Desjardins mortgage refinancing is an optimal solution for:
- Partial or complete property renovations (interior or exterior).
- Residential, commercial, or industrial real estate investments.
- Purchasing a share of the property during a separation or divorce.
- Debt consolidation.
- Significant purchases like vehicles or vacations.
- Children’s education or other significant projects.
- Additional loans to boost your RRSP or TFSA.
- Large-scale projects.
Why Choose Desjardins and the COOP for Your Mortgage Refinancing?
Desjardins financial advisors will guide you appropriately during your refinancing to help you make an informed decision regarding your financial situation and the loan amount. If you decide to refinance your mortgage loan with Desjardins, you get access to a notary member of the Cooperative of Notaries in Quebec, who will support you in all legal aspects of the mortgage guarantee and give you peace of mind.
If you borrow an amount equal to or less than your property’s initial guarantee and remain a Desjardins member for the next mortgage payment cycle (approximately five years), Desjardins doesn’t need to use the services of the Cooperative of Notaries in Quebec. You are exempt from an appointment with a notary. The documentation you sign will be handled solely by Desjardins.
If you borrow an amount exceeding your initial loan and go beyond your existing mortgage guarantee amount, Desjardins and the Cooperative of Notaries in Quebec will assist you at every step of the mortgage refinancing process.
Mortgage Refinancing: Plan Ahead to Avoid Unpleasant Surprises
Evaluating your financial ability to repay your mortgage refinancing is crucial to avoid unpleasant surprises. Requesting more than what you can genuinely afford may have repercussions over several years. To prevent such a situation, Desjardins provides valuable financial advice to all its members.
The Cooperative of Notaries in Quebec also advises that it’s generally best to refinance your mortgage loan when it matures, even though it can be done at any time. Otherwise, you might be required to pay a significant prepayment penalty. In some situations, paying a penalty today may be more profitable in the long run, especially when mortgage rates are lower than those associated with your credit card. Contact your financial advisor or one of Desjardins’ specialized financial advisors for a discussion about your financial situation.
What's the Difference Between a Mortgage Loan and a Mortgage Guarantee?
Many people often lump together a mortgage loan and a mortgage guarantee. Although they complement each other, the two differ.
A loan is the sum of money you receive from a creditor in exchange for a guarantee that you will repay your debt. This guarantee is typically in the form of a mortgage you grant to the creditor on an asset you own, such as a residence or a vehicle. If you fail to repay your debt, the creditor can use the mortgage to seize the asset and sell it to recover the amount you owe.
Therefore, the mortgage serves as collateral for the creditor in case the debtor fails to fulfill their obligations to repay the loan.
The Cooperative of Notaries in Quebec and Desjardins are delighted to offer their clients and members top-quality financial advice. Contact us for further legal information or to discuss your mortgage refinancing with one of Desjardins’ specialized financial advisors.