The Basics
Refinancing means replacing your current mortgage with a new one. You're essentially re-borrowing against your home, sometimes at a better rate, sometimes for a larger amount to access equity, and sometimes both at once.
In Canada, you can refinance up to 80% of your home's current market value. So if your home is worth $800,000 and you owe $400,000, you may be able to borrow up to $640,000, giving you access to $240,000 in equity. What you do with that equity is up to you.
The catch: refinancing before your current term ends usually means a penalty. Whether that penalty is worth paying depends on how much you stand to save or gain by acting now. I run those numbers for every client before we move forward.
Reasons to Refinance
01
If rates have dropped since you signed, or your credit has improved, you may qualify for a significantly better rate. Even a 0.5% reduction on a large mortgage adds up to tens of thousands over the life of the loan.
02
Your home's value has likely increased since you bought it. Refinancing lets you pull out that equity as cash, without selling. Common uses: investments, paying for education, or a down payment on another property.
03
Credit cards at 20%, car loans at 8%, lines of credit piling up. Rolling those into your mortgage at a fraction of the rate can dramatically reduce your monthly outgoings and simplify everything into one payment.
04
A kitchen or basement renovation that adds value to your home is often worth financing through your mortgage rather than a high-rate renovation loan. The interest cost is lower, and the amortization gives you flexibility.
Is It Right for You?
It makes sense if:
You're within 6 months of your renewal date (no penalty)
The interest savings or equity access outweigh the breakage cost
You have high-interest debt that's hurting your cash flow
You need funds for a renovation or investment and this is the cheapest source
It might not make sense if:
You're early in a fixed-rate term and the penalty exceeds the savings
You're planning to sell within the next year or two
You'd be increasing amortization purely to reduce payments without a clear plan
I'll always run the penalty calculation and break-even analysis before recommending anything. If it doesn't make financial sense, I'll tell you.
Get Started
Not sure if this applies to your situation? One call usually gives you a clear answer.
