Renewals 5 min read
Renewing with your bank vs. shopping the market
Most Canadians sign their renewal letter without comparing it to anything else. Here's what that decision actually costs.
Services / Refinance
Refinancing.
Pulling equity out of your home can pay off. It can also quietly cost you. Run the math first.
Most refinance conversations I have are about the same scenarios: paying off high-interest debt, funding a renovation, helping with tuition, or buying another property. The mechanics are similar across them — but the right choice between a refinance, a HELOC, or a second mortgage depends on numbers most online tools don't bother to ask about.
Who this is for
Probably you, if any of this is true.
- You have meaningful equity (typically 20% or more) and a use for it.
- You're carrying high-interest debt that's eating your monthly budget.
- You're planning a major renovation and want to fold it into the mortgage.
- You're considering using equity to buy another property.
My approach
How I work a refinance file.
- 01
Calculate the break-even first.
Penalty plus legal fees against interest savings over the remaining term. Sometimes mid-term refinancing still wins. Sometimes it doesn't. The math tells.
- 02
Pick the right tool.
Straight refinance, HELOC, or a second mortgage with a B-lender — each fits a different scenario. I'll walk you through which one your situation actually calls for.
- 03
Compare apples to apples.
New rate vs. old rate including the penalty cost. Most online calculators skip the penalty piece entirely, which is exactly why they make refinancing look easier than it is.
- 04
Mind the amortization.
Stretching back out to 30 years lowers your monthly payment but can quietly add tens of thousands in interest. Sometimes the trade-off is worth it. Sometimes it isn't.
Common questions
Common questions
-
What's a typical prepayment penalty on a fixed-rate mortgage?
On a fixed-rate, lenders charge the greater of three months' interest or an Interest Rate Differential (IRD). Banks calculate the IRD using their posted rate, which can make it surprisingly large; monolines often use the contract rate and end up cheaper. I'll get the exact figure from your lender before we plan anything. -
Refinance vs HELOC: which is better?
A refinance gives you a lump sum at a fixed (lower) rate. A HELOC gives you a flexible credit line at a variable (higher) rate, with interest-only payment options. If you know what you need the money for and the amount is fixed, refinance usually wins. If your need is ongoing or uncertain, a HELOC has its place. -
Will refinancing affect my credit score?
A new mortgage means a hard credit pull, which dings your score a few points temporarily. Closing one mortgage and opening another can also affect average account age. The dip is usually small and short-lived. -
How long does a refinance take?
Typically 30 to 45 days from a complete file to funding. Appraisal, lawyer instructions, and the lender's underwriting timeline are the usual variables. -
Can I do this if I'm self-employed?
Yes. The documents are different: two years of Notice of Assessments and business financials are the usual minimum. Some lenders are friendlier to self-employed files than others, and I match you to the right ones.
Get in touch
Bring your numbers. I'll bring a plan.
Send your current rate, term, balance, and the rough amount you want to pull out. I'll come back with a first read.
The form
Tell me a bit about what you're looking into.
I read every message and reply personally, usually within a business day. No pitch waiting on the other end.
From the articles
Related reading
Renewals 6 min read
What to do six months before your mortgage renewal
The renewal letter shows up 30 days before your term ends. By then you've already lost most of your leverage. Here's what to do six months out.