Refinancing is when you take your existing home mortgage, break it, and replace it with another mortgage with different terms and conditions. There are several times when you may need or want to refinance. In some cases, interest rates change and you may want to change your terms to take advantage of this because your long-term costs will go down. At other times, there is a risk that Canadian interest rates will change in the future, and you may want get a longer (or shorter) term than you have in order to prepare for the change. In some cases, there are life events that require that you to refinance (equity take out) your home mortgage in order to have the capital on hand.

Good Rule of Thumb

A good rule of thumb is that if interest rates are 1/2% to 5/8% lower than your current interest rate, it may be a good time to consider refinancing a home mortgage. To keep track of interest rate trends in Canada, sign up to the Calum Ross Mortgage Consulting Team Market Watch. You'll receive periodic rate updates by email.

To determine for yourself if it is time to refinance, click here and access our refinance calculator. Enter the details of your mortgage and what is available in the market-place today to see if a refinance makes sense.

The Right Time to Refinance

Many homeowners consider refinancing when interest rates suddenly fall or there's a change in financial circumstances. But even though a large decline in rates or an opportunity to pay off debts might make refinancing seem like an easy decision, you shouldn't consider any single variable on its own. Think about how long you plan to stay in your home, how you plan to use your equity, and how refinancing will support your overall financial goals.

For some more information about refinancing home mortgages in Canada, click here to access the Refinancing Section in Mortgages 101.