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Mortgage Refinance

Breaking your current mortgage for a new one, with the same lender or a different one, is what is known as a mortgage refinance. Some possible advantages of a refinance may include getting a lower mortgage rate, being able to access the equity in your property, consolidating your debts, or changing the duration of your loan.

There may be fees and penalties associated with a refinance that can exceed the possible savings so it is important to assess all the factors before you make your decision. Let Mortgage Squad Agents handle all your mortgage refinance needs.

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    What is a Mortgage Refinance?

    A mortgage refinance is when you have an existing mortgage agreement that you break to start a new mortgage agreement. This can be done with your current lender or with a new one. There are a number of reasons for pursuing a mortgage refinance such as getting a better mortgage rate, accessing the built up equity in your home, or consolidating your debts into one loan, however there may be fees and penalties associated with breaking your agreement.

    When you apply for a mortgage refinance the lender will assess you along the same criteria as your initial mortgage and you may be required to provide proof of income and ownership as well as checks on your credit score and history. These are done by lenders to determine if you will be able to fulfill the repayment of the loan. A mortgage refinance can be a useful tool in the right circumstances but all details should be assessed before you make a decision. Consult our trusted and experienced team at Mortgage Squad Agents to help you find the solution that is right for you.

    Different Options for a Mortgage Refinance

    There are a few different options available if you choose to go for a mortgage refinance. These options are not mutually exclusive and you can achieve many when you refinance.


    • Get a Better Mortgage Rate: If rates have gone down since you got your mortgage you may be able to refinance to get a lower interest rate.
    • Accessing Equity: With a mortgage refinance you can access the built up equity in your home which can be used for various purposes such as: Home improvements and renovations Debt consolidation Funding an education or vehicle
    • Changing the Terms: Another use of a mortgage refinance is to change the terms of your loan, this can include: Changing your mortgage to a fixed rate or variable rate Changing the duration of your mortgage term Altering the payment structure to something more suitable for your financial situation

    Benefits of a Mortgage Refinance

    There are many reasons why people choose to go with a mortgage refinance. Depending on your existing mortgage, your property and finances, and the market you may be able to take advantage and benefit.


    • Lower Mortgage Rate: If the market or your credit score has improved since you first got your mortgage you can take advantage of a mortgage refinance to get a lower interest rate.
    • Pay for Home Improvements and Renovations: With a mortgage refinance you can access some of the equity in your home to pay for renovations and repairs. The upgrades can help increase the value of your home.
    • Debt Consolidation: Using your equity you can pay off your higher interest debts and consolidate them into one loan that has a lower interest rate in your mortgage.
    • Funding Large Expenses: Accessing your equity through a mortgage refinance can be a way to pay for large expenses like an education or a vehicle.
    • Change Duration or Payment Structure: If your financial situation has changed and you would like to change the duration or structure of your loan you may be able to negotiate a change with your lender with a mortgage refinance.
    • Change to a Fixed or Variable Interest Rate: Mortgages can have a fixed interest rate or a variable interest rate, each having their own advantages and disadvantages. With a refinance you may be able to change the type of interest that your lender charges you.

    What are the Risks and Costs of a Mortgage Refinance?

    A mortgage refinance can be a useful tool that may save you money but that depends on your existing mortgage, your financial situation, and the market. Depending on the context a refinance may not be the option for you.

    Penalties

    You may incur penalties for breaking your mortgage agreement and going for a refinance.This will vary depending on your lender but penalties may cost up to 3 months worth of interest. In some cases these penalties may exceed what you would be saving by going with a mortgage refinance.

    Fees and Closing Costs

    There are processing and closing fees associated with a mortgage refinance. You may be charged for property evaluation costs, financial assessment costs, and lender processing fees among others. These will typically range between 2% and 5% of the remaining loan principal.

    Selling the Property

    Since there are penalties and fees when you go with a mortgage refinance it usually takes some time to break even or to realise your savings, sometimes this can be many years. If you are planning on selling the property in the near future it is unlikely that you will save enough for the refinance to be a worthwhile option.

    Processing Times

    Since the lender will need to assess your finances and situation it can take some time to get your mortgage refinance approved, generally between 30 to 60 days. You may want to go with a different option if you are in need of quicker access to funds.

    A mortgage refinance is a big decision that requires careful analysis of all the variables and options available to you. Be sure to ask questions and be thorough when exploring the possible solutions. Let Mortgage Squad Agents help you find a solution that is right for you.

    Commonly Asked Questions

    There are a few reasons to get a mortgage refinance including lowering your mortgage rate, accessing your equity, or to consolidate debt. If you are able to lower your mortgage rate by 1% or more and have several years left on your mortgage it may be worth going with a mortgage refinance.
    Depending on your context a mortgage refinance can be a good or a bad idea. If the associated penalties and costs of breaking your current mortgage are greater than the possible savings, it may be better to investigate other options available to you.

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