Should You Refinance Your Mortgage? Here’s What to Know
You’ve been making mortgage payments for a few years. Rates have shifted. Maybe your life has changed —
a growing family, renovations on the horizon, or high-interest debt cutting into your cash flow.
Whatever the reason, you’re wondering: should I refinance?
Mortgage refinancing can be a powerful financial tool — or an expensive mistake — depending on the timing
and your financial goals. Here’s what you need to know.
What Does It Mean to Refinance a Mortgage?
Refinancing means replacing your current mortgage with a new one — either with your existing lender or a new lender.
The new mortgage pays off the old one, giving you new terms, a new interest rate, and possible access to the equity you’ve built in your home.
5 Reasons Canadians Refinance Their Mortgage
1. To Secure a Lower Interest Rate
If rates have dropped since your original mortgage, refinancing may reduce your monthly payment and total interest paid.
Even a small reduction can save thousands over time.
2. To Access Home Equity
As your home value rises and your mortgage balance decreases, your equity grows.
Refinancing lets you access up to 80% of your home’s appraised value for renovations, investments, or other major expenses.
3. To Consolidate High-Interest Debt
Moving high-interest debt such as credit cards or loans into your mortgage can significantly reduce your monthly interest costs.
This strategy can improve cash flow when structured properly.
4. To Change Mortgage Terms
Refinancing allows you to switch from variable to fixed, extend your amortization for lower payments,
or shorten it to pay your mortgage off faster.
5. To Fund Major Life Expenses
Home equity refinancing can be one of the most affordable ways to fund renovations,
education costs, or even investment opportunities.
What Are the Costs of Refinancing?
Refinancing comes with costs that need to be weighed against the savings:
- Mortgage break penalty — Usually 3 months’ interest or IRD penalty
- Legal fees — Typically $700–$1,500
- Appraisal fee — Usually $300–$500
- Discharge fee — Charged by your current lender
Rule of Thumb: If your savings from refinancing outweigh the total costs within 12–24 months, refinancing may be worth considering.
Can You Refinance Before Your Term Ends?
Yes — but breaking your mortgage early often means paying a penalty.
In many cases, the long-term savings or equity access still outweighs the cost.
Some lenders also offer a “blend and extend” option, which blends your current rate with a new rate and extends the term without a penalty.
What Is a CHIP Reverse Mortgage?
If you’re 55 or older, a CHIP Reverse Mortgage allows you to access up to 55% of your home’s value tax-free,
with no monthly mortgage payments required. Repayment occurs when the home is sold or you move.
How to Refinance: The Key Steps
- Review your current mortgage — balance, rate, and remaining term
- Define your goal — lower rate, debt consolidation, or equity access
- Get a property appraisal to confirm market value
- Compare lenders for the best refinancing options
- Calculate the break-even point to measure savings
- Finalize the refinance and register the new mortgage
Is Now a Good Time to Refinance?
If your mortgage rate is high, your renewal is approaching, or you have strong equity in your home,
refinancing may be a smart move.
Planning ahead gives you leverage. Exploring refinancing options 4–6 months before renewal
often leads to better lender offers and stronger negotiating power.
Explore Your Refinancing Options Today
Find out whether refinancing could lower your payments, unlock equity, or improve your overall financial flexibility.
Free Consultation | 438-866-3233
Confident Mortgage, Our Responsibility
Buying your first home is one of the most exciting — and nerve-wracking — milestones of your life. Between saving for a down payment, understanding mortgage terminology, and navigating the approval process, it can feel like you’re learning a new language overnight.
The good news? You don’t have to figure it out alone. As a Mortgage Agent Level 1 serving Alberta and Ontario, Rahul Soni has helped hundreds of first-time buyers go from confused to confident — and closed.
This guide walks you through every step of the first-time home buyer mortgage process in Alberta.
Step 1: Understand What Lenders Look At
Before you can be approved for a mortgage, lenders evaluate several key factors to determine how much risk they’re taking on. Here’s what matters most:
Credit Score — Most lenders require a minimum score of 620; 680+ unlocks the best rates
Income & Employment — Full-time, part-time, and self-employed income all qualify with the right documentation
Gross Debt Service (GDS) & Total Debt Service (TDS) Ratios — Your housing costs and total debts should stay within lender limits
Down Payment — Minimum 5% on homes up to $500,000; a sliding scale applies above that
Property Value — The home must appraise at or above the purchase price
Tip: If your credit score is below 620, don’t panic. There are still lender options — and strategies to improve your score before applying. Book a free consultation with Rahul to find out where you stand.
Step 2: Save for Your Down Payment
In Canada, the minimum down payment depends on the purchase price:
Homes up to $500,000 — 5% minimum
$500,001 to $999,999 — 5% on the first $500K + 10% on the remainder
$1,000,000+ — 20% minimum (no mortgage insurance available)
If you put down less than 20%, you’ll need CMHC mortgage insurance, which is added to your loan amount. For many first-time buyers in Alberta, this is still the most affordable path into homeownership.
First-Time Buyer Advantage: You may be eligible to use up to $35,000 from your RRSP tax-free under the Home Buyers’ Plan. The First Home Savings Account (FHSA) also lets you contribute up to $8,000/year with full tax deductions — up to a $40,000 lifetime limit.
Step 3: Get Pre-Approved Before You Shop
A mortgage pre-approval is one of the smartest moves you can make before house hunting. Here’s why it matters:
Locks in an interest rate for 90-120 days, protecting you from rate increases
Shows sellers you’re a serious, qualified buyer
Clarifies exactly how much home you can afford
Speeds up final approval once you find the right property
Pre-approval is not the same as final approval — but it’s a powerful first step. Rahul Soni can walk you through the pre-approval process in as little as 24 hours.
Step 4: Choose the Right Mortgage Type
Fixed Rate vs. Variable Rate
A fixed-rate mortgage locks your interest rate for the full term — usually 1 to 5 years — so your payment never changes. A variable-rate mortgage fluctuates with the lender’s prime rate, which can work in your favour when rates drop. Your personal risk tolerance and budget stability are the key deciding factors.
Choosing Your Amortization and Term
Most Canadians choose a 25-year amortization with a 5-year term. Shorter terms can make sense if rates are expected to drop. A mortgage professional can model different scenarios based on your situation.
Step 5: Work With the Right Lender
You’re not limited to your bank. As a Dominion Lending Centres agent, Rahul Soni has access to over 90 banks, credit unions, and trust companies — including TD, RBC, CIBC, Scotiabank, First National, MCAP, and many more. One application, dozens of lenders compared, the best possible rate for your situation.
Alberta-Specific Programs to Know
CMHC Mortgage Insurance — Required for down payments under 20%
Home Buyers’ Amount — Claim up to $10,000 on your taxes in the year you purchase
First Home Savings Account (FHSA) — Tax-deductible contributions, tax-free withdrawals for a first home
Home Buyers’ Plan (HBP) — Withdraw up to $35,000 from your RRSP tax-free
Ready to Take the First Step?
Whether you’re just starting to think about buying or you’re ready to make an offer, Rahul Soni is here to help you navigate the mortgage process with confidence. Serving Edmonton, Calgary, Brampton, and all of Alberta and Ontario.
Book Your Free Mortgage Consultation Today | rahulsoni@dominionlending.ca | 438-866-3233
Beyond Borrowing, Beyond Collateral
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Luxurious Mortgage, Better Results
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Classic Hypothec, Brilliant House
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Lush Mortgage, We Take Care Of You!
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