Refinancing may allow you to access home equity, consolidate debt, fund renovations or adjust your mortgage structure. I'll review your goals, eligibility and the overall financial impact, including any prepayment penalties, fees and changes to your total borrowing costs. This helps you decide whether refinancing is a suitable option for your situation.
What refinancing is
Refinancing replaces your current mortgage with a new one, often for a larger amount or with different terms. Common reasons include:
- Consolidating debt that has a higher interest rate into one payment
- Funding renovations
- Accessing equity for other goals, such as education costs
- Changing between fixed and variable, or changing your amortization
How much you can access
In most cases you can borrow up to 80% of your home's appraised value, minus what you still owe. For example, on a home worth $900,000 with $500,000 owing, the most you could access would be about $220,000.
What it can cost
- A prepayment penalty if you refinance before your term ends. On a fixed rate it's usually the greater of three months' interest or the interest rate differential, and it can be large
- An appraisal and legal fees for the new mortgage
- Qualifying again under current rules, including the stress test
If your term ends soon, waiting until renewal can avoid the penalty altogether. We'll compare both.
Consolidating debt
Rolling credit cards or loans into your mortgage can lower your monthly payments, but it turns unsecured debt into debt secured by your home, and spreading it over a long amortization can mean paying more interest overall. I'll show you the full cost so you can decide if it makes sense.
All mortgages are subject to lender approval.