Refinancing your mortgage can be a powerful financial move, if done for the right reasons. Refinancing can lower payments, consolidate debt, or unlock equity, but it may come with costs like penalties and fees that require careful analysis therefore it is crucial that you understand the pros and cons. The abundance of online information can be overwhelming which is why having a professional guide you through the process step-by-step is essential.

TOP REASONS WHY HOMEOWNERS CONSIDER REFINANCING:

1. Financial Goals:

   • Determine why you want to refinance: reduced monthly payments, lower interest rates, debt consolidation, accessing home equity for renovations or investments.

   • Assess how refinancing aligns with your long-term financial plans.

2. Consolidate High-Interest Debt:

   • Consolidating high-interest debts into a lower-interest product such as a mortgage may save you money and help simplify your finances and make it easier to manage your debt.

3. Home Equity:

   • You typically need at least 20% equity to qualify for refinancing. Equity is calculated based on your home’s appraised value minus your current mortgage balance.

   • In BC, where average home prices are high (e.g., $1,190,900 in Vancouver as of March 2025), equity can be significant but varies by region.

4. Interest Rates and Market Conditions:

   • Compare current mortgage rates to your existing rate.

   • Your credit score has improved

   • Consider whether a fixed or variable rate suits your risk tolerance.

5. Costs of Refinancing:

   • Prepayment Penalties: Breaking your mortgage early can cost thousands, depending on your lender’s terms.

   • Legal and Appraisal Fees: Expect $1,200+ for legal services and $300–$500 for a home appraisal.

   • Closing Costs: Typically 2–5% of the loan amount.

   • Title and Discharge Fees: Required when changing lenders.

6. Credit and Financial Stability:

   • Lenders require a minimum credit score of 575 for refinancing, with better rates for higher scores.

   • Your debt-to-income ratio and income stability will be assessed to ensure you can handle the new mortgage.

7. Alternatives to Refinancing:

   • Consider a Home Equity Line of Credit (HELOC) or a blend-and-extend mortgage to avoid breaking your current contract.