Why Refinance Your Mortgage?
Canadians refinance for several reasons:
- Lower their interest rate before renewal (saving $200-$500/month)
- Access home equity for renovations, investments, or emergencies
- Consolidate high-interest debt into one lower-rate mortgage
- Switch from variable to fixed rate for payment stability
- Shorten their amortization to pay off the house faster
When Is the Best Time to Refinance?
The ideal time is 3-4 months before your mortgage renewal date. This gives you time to shop rates without paying prepayment penalties. If you're mid-term with a fixed rate, calculate your penalty first — it could be thousands. Variable rate mortgages usually have a 3-month interest penalty, making them cheaper to break.
How Much Can You Save?
On a $400,000 mortgage:
- Reducing rate from 6% to 4.5% saves ~$350/month ($4,200/year)
- Reducing rate from 5.5% to 4% saves ~$375/month ($4,500/year)
Rates change daily. Check current offers before deciding.
HELOC vs Refinance
A Home Equity Line of Credit (HELOC) gives you flexible access to equity without breaking your existing mortgage. You only pay interest on what you use. A full refinance replaces your mortgage with a new one — useful when you want a lower rate on your entire balance. Many Canadians use both: refinance for the rate, HELOC for flexibility.
What Documents Do You Need?
1) Recent pay stubs or proof of income
2) Notice of Assessment (last 2 years)
3) Current mortgage statement
4) Property tax bill
5) Photo ID
Self-employed? You'll need 2+ years of business financials. FundPath lenders can help guide you through the paperwork.