Mortgage refinancing involves replacing your current mortgage with a new one, typically to get a better rate or access your property equity.
The Three Main Reasons to Refinance
01. Lower your interest rate: If rates have dropped since your last mortgage, refinancing can generate significant savings. The general rule is that a reduction of 0.5% or more justifies refinancing costs.
02. Free up equity: Refinancing allows you to borrow up to 80% of your property value (minus the mortgage balance). This liquidity can fund renovations, education, or investments.
03. Consolidate debts: Integrating high-rate debts (credit cards, personal loans) into your mortgage can reduce your overall interest burden.
Costs to Consider
Refinancing incurs an early repayment penalty (typically 3 months of interest for variable, or the interest rate differential for fixed), plus notary fees ($1,200–$2,500) and potentially broker fees.
The Break-Even Calculation
Divide total costs by monthly savings to get the number of months needed to break even. If this number is less than your ownership horizon, refinancing is worthwhile.
OACIQ Broker Advice
A mortgage broker can calculate your refinancing break-even point and get you the best rate from 200+ lenders. Consult for free.
Did you find this article helpful?
Our OACIQ-certified mortgage brokers can answer your questions personally. Free service — response within 24-48 hours.
Get My Free Quote