When does it make sense to revisit your mortgage terms? We outline your best options — at your best rates.
Whether you want to tap into your home's equity, consolidate debt at a lower rate, or extend your amortization, refinancing can be the right choice for the right reasons.
There are several valid reasons to consider a mortgage refinance.
This option can help you access additional funds through your home equity or utilize beneficial mortgage features (such as extending your amortization for lower mortgage payments) when needed.
It's important to note that refinancing isn't always the optimal choice — there may be fees and charges involved, especially if you decide to break your term to proceed.
However, certain circumstances make refinancing a sound financial decision. Let's explore further.
Refinances are typically uninsured (known as conventional) mortgages, allowing you to access up to 80% of your home equity (resulting in a loan-to-value ratio of 80% or lower).
Starting January 15, 2025, eligible homeowners aiming to build a secondary suite can access an insured refinance for up to 90% of their property's 'improved value' (capped at a $2 million home value) for construction funds.
A refinance involves breaking your current mortgage terms and conditions to establish a new mortgage with updated terms and conditions — either with your existing lender or a different one.
The appropriate timing for a refinance depends on your needs and situation. You might choose to wait until your renewal period (which avoids pre-payment penalties associated with breaking your term).
Alternatively, you can refinance at any time if the benefits of accessing necessary funds or options outweigh the costs of terminating your existing contract.
Occasionally, a lender may permit a mid-term refinance, sometimes referred to as a blend-and-extend, which can help you maintain a lower rate (fees may apply).
Renewal: Resets your next term while keeping the same mortgage terms and conditions (ideally with a better-negotiated rate).
As your renewal period approaches, typically about 4-6 months before the maturity date, you can choose to re-sign with your current lender or switch to a different one.
Refinance: Alters your original terms and is usually an uninsured mortgage product, meaning a homeowner can no longer access lower insured mortgage rates.
Consider setting up a helpful renewal reminder! And don't forget to consult with us to ensure you secure your best rate and product.
The Pros: Refinance to access funds or specific mortgage features
Unlocking up to 80% (or 85%, depending on the lender) of your home's value — or finding a better mortgage solution — can help address various needs, including:
The Cons: Extra costs of a refinance
A refinance typically means you'll pay a slightly higher rate, especially if you had a default-insured mortgage previously (which offers access to lower rates).
Breaking your original mortgage terms also means your mortgage needs to requalify through the federal mortgage stress test, which may affect how much funds you can access.
Plus, there may be additional fees and charges you may face:
Keep in mind that many of our True North clients benefit from a refinance, over and above any additional costs.
You can use flexible pre-payment privileges or change your payment frequency later to pay down your mortgage balance or shorten your amortization when it works for you.
Our friendly, highly-trained brokers are here to help you determine your refinance numbers and details for an accurate (mortgage) picture for clearer decisions — and offer strategies to reach homeowning success.
A refinance can take approximately 3-4 weeks (or more) to finalize the details, especially since an appraisal is usually required.
So, if you're thinking about a refinance, make sure to allow enough (mortgage) time, regardless of whether you're waiting for your renewal period, switching
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