Mortgage Refinancing and Home Equity

Mortgage refinancing offers many benefits, from getting a better interest rate to lowering your regular payment. One of the most popular reasons why people refinance is to access their home's equity to serve as collateral for a home equity loan or line of credit.

Find out if mortgage refinancing is right for you.

Home equity vs. mortgage?

When you start the process of refinancing, you might become confused by all the different terminology. Mortgages and home equity are directly related to each other, but aren't the same.

  • Home mortgage: Loans secured by your house and paid in installments based on the period of time as determined by yourself and CIBC. The mortgage secures your promise to repay the home mortgage.
  • Home Equity is the difference between your home's fair market value and the outstanding balance of the mortgage. In other words, it's the amount you have already paid against the value of your house. Therefore, your property's equity increases as you make more mortgage payments.

What are home equity loans and lines of credit?

Mortgage refinancing allows you to use the home equity you've established in the form of home equity loans and lines of credit, available for home improvements, college tuition, major purchases, etc.

Determine how much equity is available in your home with our home equity calculator.

  • A home equity loan is a secured loan paid in one lump sum based on the amount of equity you have in your home. Your home is used as collateral for such loans.
  • A home equity line of credit can be combined with a mortgage under a CIBC Home Power Plan. Rather than giving you the loan up front in a lump-sum, you'll have ongoing access to funds through a line of credit. As you pay down your mortgage each month, you build equity in your home which automatically increases your line of credit amount up to your CIBC Home Power Plan limit.

It's important to take into account factors such as interest rate and how long you plan to remain in your home before deciding if a home equity loan or CIBC Home Power Plan is right for you.

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