Refinancing a property is a key real estate topic that many people don't fully understand. Typically, homeowners will pursue refinancing to take advantage of better interest rates or access equity that's tied up in their property. Read on to explore what refinancing entails and answer the question that's on many homeowners’ minds: can you sell your home after refinancing? 

What is refinancing?

Refinancing a property refers to obtaining a new loan or mortgage to replace an existing one on the same property. Puts simply, it's like hitting the reset button on your mortgage terms.

Why refinance your property?

People choose to refinance for various reasons. One common motive is to take advantage of lower interest rates. If mortgage rates have dropped since you initially took out a loan from the bank, refinancing can help you secure a new mortgage at a lower rate. This switch-up can potentially save you money on interest payments over time. Another reason to refinance is to access the equity in your property. Over time, as you make mortgage payments and the value of your property increases, you build equity. Refinancing allows you to tap into that equity by borrowing against it. This can be useful to pay for things like home improvements, debt consolidation, and other financial needs, or even to purchase more real estate! 

Does it affect your ability to sell?

Now, let's move on to the question of whether you can sell your home after refinancing. The answer is, yes you can! Refinancing in no way prevents you from selling your property. That being said, it's important to understand the process. When you refinance, you replace your existing mortgage with a new one. So, when you sell your home, the proceeds from the sale will first go towards paying off the outstanding balance on the refinanced loan. The amount that remains after paying off the refinanced loan will be yours to keep.  It's worth noting that refinancing may come with certain terms and conditions, such as prepayment penalties or specific restrictions regarding selling the property within a certain time frame. You should review the terms of your refinanced loan and consult with your lender to understand any potential implications or costs associated with selling your home after refinancing. It's also important to work with both your real estate agent and the lender to ensure a smooth transaction and proper coordination of funds. 

The bottom line

Refinancing allows you to replace your existing mortgage with a new one that offers more favourable terms. And yes, you can sell your home after refinancing, so don't worry about that! Just be aware of the steps involved in the process, as well as any terms or restrictions associated with your refinanced loan. Finally, as always, it's important to gather information, consult with professionals, and make informed decisions that align with your financial goals. Speaking of professionals, why not start with a real estate broker? Our team has plenty of experience with refinancing and would be happy to advise you on your situation. If you have questions, reach out today!