Select a location from above to display BDMs
Contact a BDM
Manager, B2B Solutions
Jason Provencher Phone: 403.472.7340 Toll Free: 1.888.472.7340 Fax: 403.718.3042 jprovencher@bridgewaterbank.ca
British Columbia
Yvonne Futter Phone: 604.506.7114 Toll Free: 1.866.867.1777 Fax: 403.718.3042 yfutter@bridgewaterbank.ca
Edmonton, central & northern Alberta
Laura Cook Phone: 587.341.4160 Toll Free: 1.844.430.4846 lcook@bridgewaterbank.ca
Ontario north, central & Niagara region
Matt Royston Phone: 705.730.9387 Toll Free: 1.855.730.9387 mroyston@bridgewaterbank.ca
Select a location from above to display BDMs
Contact a BDM
Manager, B2B Solutions
Jason Provencher
Phone: 403.472.7340
Toll Free: 1.888.472.7340
Fax: 403.718.3042
jprovencher@bridgewaterbank.ca
British Columbia
Yvonne Futter
Phone: 604.506.7114
Toll Free: 1.866.867.1777
Fax: 403.718.3042
yfutter@bridgewaterbank.ca
Edmonton, central & northern Alberta
Laura Cook
Phone: 587.341.4160
Toll Free: 1.844.430.4846
lcook@bridgewaterbank.ca
Ontario north, central & Niagara region
Matt Royston
Phone: 705.730.9387
Toll Free: 1.855.730.9387
mroyston@bridgewaterbank.ca

Debt burden refinancing

The New Year is often a time of reflection and renewal. We want to lose weight, quit bad habits or find a new job. For brokers it provides a great opportunity to offer customers options to reduce their cost of debt through refinancing. There are two major reasons to refinance:

1. Customer qualifies for better interest rates
Is your customer’s mortgage currently with a private lender? Have you checked to see if they qualify for less-onerous terms with an alternative lender? Any of the following situations may warrant an application for refinancing:

  • LTV  is now below the alt lender’s threshold: your customer’s regular mortgage payments and/or  increased property value may have reduced their LTV below the 80%, 75% or 65% maximums that necessitated private lending to begin with
  • Employment situation has change: If your BFS customer has been in business for two years now, or if they switched to a salary/wage earner, refinancing with an alt lender may be possible
  • Extend the loan term: Alt lenders often offer terms up to 30 years. If your customer couldn’t qualify for an alternative mortgage because their GDS/TDS ratios were too high, extending their mortgage term may reduce the ratios to be within the guidelines of an alt lender

Keep in mind that refinancing involves prepayment charges, which should be factored into the calculations of how much it might save. Depending on the terms of the original mortgage, these could significantly reduce the amount saved by refinancing at a lower interest rate. Also, extending the term of any loan will increase the total amount of interest paid over the loan’s life.

2. Debt Consolidation

The post-holiday blues are often associated with debt. Many of us get carried away with gift-giving and sunny vacations. This is a good time to inform your customers that refinancing to consolidate their high-interest debt can save thousands in interest savings with a simple, single monthly payment. Some debt-consolidation considerations:

  • The monthly payment should be less than the sum of the monthly payments on the individual loans
  • The interest rate on the refi should be lower than the average of the interest rates on the individual loans
  • If the term of the refinance is longer than the terms of the original loans, your customer may end up paying more interest in the long run, even if the rate is lower

In either case, if the savings from refinancing outweighs the costs, it’s an easy sell to your customer and is also a process that can be repeated if/when your customer progresses to prime borrower status.

What do you think? We’d like to hear from you in the comments section.

© BRIDGEWATER BANK 2019