When refinancing makes sense (and when it does not)
Refinancing is not always the right move. There are costs involved, and sometimes your current loan is actually competitive. We give you an honest assessment.
Refinancing often makes sense when
- You are paying a higher rate than current market offers. If your rate has crept up or you have been with the same lender for years without reviewing, there may be savings available.
- Your fixed rate period is ending. Coming off a fixed rate is the ideal time to review your options before rolling onto a potentially higher variable rate.
- Your circumstances have changed. Higher income, paid down debt, or increased property value can qualify you for better loan terms than when you first borrowed.
- You want to access equity. Renovations, investment deposits, or other purposes may be funded by the equity you have built in your property.
Refinancing may not make sense when
- Break costs outweigh the savings. If you are mid-way through a fixed rate, exit fees can be substantial.
- Your loan is nearly paid off. The costs of switching may not be recovered on a small remaining balance.
- Your situation has changed negatively. Reduced income or increased debt may mean you would not qualify for better terms.
