Readvanceable mortgage

What is a readvanceable mortgage? We asked a mortgage specialist, Taya Weiszhaar and this is the information that she provided.

This mortgage product lets you re-borrow paid-down principal any time you need it, up to your approved limit. In a readvanceable your "limit" is the total borrowing your lender approves you for, including both your mortgage and a line of credit.

This product is worth considering to well-qualified borrowers who have at least 20% equity in their home. Having the benefit of liquidity can be priceless if a need arises later for low-cost funds.

Just remember two things if you're considering this type of mortgage:

  • Readvanceable mortgages make it easy to spend, so be sure you're disciplined enough not to blow the line of credit on discretionary spending.
  • If you move a readvanceable mortgage to a new lender at maturity the mortgage must be re-registered. That means you'll often need to pay a lawyer-whereas a regular mortgage can be switched without legal fees.