Getting a new mortgage to replace the original is called refinancing.

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Refinancing is done to allow a borrower to obtain a better interest term and rate.

The first Home loan is paid off by the new lender, allowing the new Home loan to be created on better terms.

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One of the best reasons to refinance is to lower the interest rate on your existing loan.

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Historically, the rule of thumb is that refinancing is a good idea if you can reduce your interest rate by at least 1%. However, many lenders say 0.5% savings is enough of an incentive to refinance.

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Refinance will generally provide one or more of the following:

• A better mortgage interest rate

• Lower monthly payments

• Shorten your term

• Borrow money for a renovation

• Consolidate debts such as personal loans or credit cards

• Combine two mortgages into one