Mortgage Education, Mortgage Refinance

Mortgage Refinancing Options and Why Should I Do It?

mortgage refinancing options

One of the features of home ownership that many people like, is the ability to just “settle in” once they have all the financing and paperwork addressed. They have their mortgage payment schedule set up, they make payments, auto renew when the time comes and rarely give the process much thought.

There is nothing wrong with this method if it suits your personality. But you may be missing out on some money-saving opportunities along the way. Keep in mind, your home is an asset and with any asset there is room to maneuver and use it to your advantage. As a homeowner, one of these ways is through mortgage refinancing.

What Is It?

Mortgage refinancing options are often confused with getting a second mortgage, but they are two separate things. A second mortgage does not replace your existing mortgage, but is in addition to it.

When you refinance your mortgage, you are replacing the existing mortgage with a new one, often at a lower mortgage rate.

It’s not necessary to refinance with your current lender, and many homeowners use this opportunity to switch lenders. With refinancing, your original lender is paid the balance of the loan in full, so your dealings with them will be finished.

Mortgage refinancing does have costs associated with it, because you are paying off your current loan before it is due. Most lenders charge a penalty to prepay your mortgage. If you have a fixed mortgage, that penalty is usually three months interest. Can also be the interest rate differential payment, whichever one is greater.

Reasons to Refinance

Despite the penalties, the benefits of refinancing are often too attractive to ignore. Some of the common reasons homeowners opt for mortgage refinancing include:

Lower Rates:

  • Depending on the amount of your penalty, and how much mortgage is still outstanding, refinancing for lower rates can pay off over time.


If you aren’t planning to stay in your home over the long term, then refinancing to take advantage of lower rates may not make sense. However, if you think this will be your home for years to come, then you’ll be able to recover the cost of refinancing and save money. It’s all about tinkering with the numbers, so make sure you work them out ahead of time before taking action.

Extra Funds:

  • Accessing the current equity in your home is another reason to refinance. If you’ve owned your home for awhile and have built up equity, you can access up to 80% of the home’s value minus the outstanding mortgage.


As an example, if your home is valued at $300,000 and you only have $100,000 left on your original mortgage. You should be able to access 80% of the remaining $200,000, which equals $160,000. Some of the reasons people like to refinance for home equity include having extra money for home renovations, investments, weddings or children’s education.

Debt Consolidation:

  • Consolidating other debts is also a reason people choose mortgage refinancing. If the mortgage rates are favourable, you can potentially refinance your mortgage and use the equity you’ve built to consolidate other high interest debts. These include, car loans, credit cards or lines of credit. With the new, low interest mortgage you’ll only have one payment to worry about. Allowing you to save every month on interest charges.


If you currently have a mortgage and feel like refinancing might make sense for your situation. Give me a call today and we can go over the your mortgage refinancing options.

If you have a fixed rate of 4% or higher, you should definitely think about refinancing as you WILL save thousands.  Also, if you have a variable rate at 3% or 2.80%. We highly recommend to break this and roll into a new variable at 2.20% and save thousands.

Let us at show you your mortgage refinancing options. As well as, how to save thousands in interest and save hundreds in payments every month.