Mortgage Refinancing

Balance risk and reward with the right strategy

Mortgage refinancing means renegotiating your existing mortgage loan agreement by paying off one loan and replacing it with another. You might do this to consolidate debts, or you could use the equity in your property to increase your mortgage loan amount for large expenses.

Important considerations

Cost of mortgage refinancing

Refinancing costs 3% to 6% of the loan’s principal. It takes years to recoup that cost with the savings generated by a lower interest rate or a shorter term. So, if you are not planning to stay in the home for more than a few years, the cost of refinancing may negate any of the potential savings.

Potential savings

Carefully consider your options to understand your potential long-term savings compared to the short-term costs.

Long-term plans

How long until you are planning to sell your home? This will impact whether or not refinancing is a smart move.

Other debts

When used carefully, refinancing can be a valuable tool for bringing other high-interest debts under control.

Frequently Asked Questions

Is there a benefit to refinancing my mortgage if I’m planning to sell soon?

I have a lot of high-interest credit card debt. Is it wise to refinance my mortgage to pay it off?

I have a financial emergency and don’t have the funds to deal with it—is refinancing an option?

Is it worth it to refinance to take advantage of tax deductible interest?

Why refinance?

Refinancing a mortgage means paying off an existing loan and replacing it with a new one.

Obtain a lower interest rate

Shorten the term of your mortgage

Convert between adjustable and fixed-rate mortgage

Tap into home equity for emergency, large purchase or consolidate debt

When is refinancing my mortgage a good idea?

Refinancing can be risky if not done strategically.

Refinance if:

You have the opportunity to reduce your interest rate by at least 1-2%

You are able to reduce your loan’s term without significantly changing your monthly payments

You want to change your adjustable rate mortgage (ARM) to a fixed-rate mortgage or vice-versa

You need to tap into your equity to consolidate high-interest debts or deal with a financial emergency

Risks to Consider

Consolidating debts by refinancing can lead to a slippery slope of never-ending debts if not done carefully

Depending on the situation, you may end up extending your loan term and significantly slowing the process of paying off your home

Refinancing costs 3% to 6% of the loan’s principal, which will take years to recoup that cost with the savings generated by a lower interest rate or a shorter term

Why work with a mortgage broker to refinance your mortgage?

Market knowledge

A broker understands the ins and outs of the local market, interest rates and current mortgage trends, meaning they will also know whether refinancing is a good option for you.

Peace of mind

Refinancing may be the cause or the result of a stressful situation. Working with someone you can trust to help you navigate the process lets you rest assured you are making the best possible decision for the short- and long-term.

Accomplish your goals faster

Working with a mortgage broker means getting advice on setting achievable financial goals and making a solid plan to make them a reality.

Mortgage tips

How much can I save by comparing interest rates in BC?

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