Refinance
Sometimes the math changes. We'll show you when it makes sense to move.
Refinancing means breaking your current mortgage and replacing it with a new one. There's almost always a cost to doing that: a penalty, legal fees, potential appraisal. Those costs need to be weighed against what you gain on the other side. The math either works or it doesn't. I'll show you which one.
When refinancing makes sense
The most common reasons: interest rates have dropped significantly since you signed, you want to consolidate higher-interest debt, you need access to equity for a renovation or other purpose, or your financial situation has changed in a way that warrants a different product.
The test is simple: add up the cost of breaking (penalty plus fees) and divide it by the monthly savings or cash flow benefit. That's your breakeven point in months. If you plan to stay in the property past that point, the refinance makes financial sense. If you don't, it probably doesn't.
Understanding your penalty
Break penalties are calculated one of two ways: three months' interest, or the Interest Rate Differential (IRD). IRD is based on the gap between your current rate and the rate the lender can charge for the remaining term. In a rate environment where rates have moved substantially, IRD can be significant.
The penalty amount varies by lender and by product, and it's calculated at the lender's discretion using their published posted rates, which affects the result. We'll get the actual penalty number from your lender before you make any decisions.
Accessing your equity
If your property has appreciated and you've been paying down the principal, you may have significant equity available. A refinance can access that equity as a lump sum, for renovations, to pay down other debt, or for other purposes.
The limit is 80% of your property's appraised value, less what you owe. If you're refinancing primarily to access equity rather than to improve your rate, we need to look at whether a HELOC or a blend-and-extend option might cost less than a full refinance.
What to have ready for the first conversation
- •Current mortgage statement (balance, rate, lender, maturity date)
- •Recent property assessment or sense of current market value
- •Statement of any debts you're considering consolidating
- •Two years of income documentation
- •Three months of bank statements
Don’t have everything on this list. That’s fine. We can work out what’s actually needed once we understand your situation.
We'll run the numbers with you. No pressure to move if it doesn't make sense.
Most first conversations are twenty minutes. No pressure, no obligation, just a look at your situation.