Active Mortgage · Guide
How refinancing works
Refinancing replaces your existing mortgage with a new one, often for a larger amount or different terms. People refinance to access equity, consolidate debt, change their rate type or adjust their amortization. Here is how the process works.
Common reasons to refinance
Accessing equity for renovations or other goals, consolidating higher-interest debt, switching between fixed and variable, adding or removing a borrower, or extending the amortization to reduce payments. Each has different trade-offs.
How much can you borrow?
For a standard refinance with a mainstream lender, the new mortgage is generally limited to 80% of your home's appraised value. You'll also need to qualify on income and credit at the new amount, including the stress test.
Costs to consider
If you refinance before your term ends, you may pay a prepayment penalty. Fixed-rate penalties are often the greater of three months' interest or an interest rate differential; variable-rate penalties are often three months' interest. There may also be appraisal and legal costs, though some lenders offer to cover part of them.
Refinancing at renewal can avoid a penalty entirely, so timing matters.
The steps
Gather income and property documents, get an appraisal, apply and receive approval, then sign with a lawyer who pays out the old mortgage and registers the new one. Our brokers can compare a full refinance against alternatives such as a HELOC or a blend-and-extend with your current lender.
Is refinancing the right move?
A refinance can lower your overall interest cost when you're replacing high-interest debt, but stretching short-term debt over a long amortization can cost more in the end. Compare the total cost, not just the monthly payment, and include any penalty and closing costs.
Alternatives may suit some situations better: a HELOC for ongoing or uncertain costs, a blend-and-extend with your current lender to avoid a penalty, or waiting until renewal. Our brokers can lay out these options with real figures so you can compare them fairly.
Documents to have ready
Recent pay stubs and an employment letter, or two years of tax documents if you're self-employed; your current mortgage statement; property tax statement; and details of any debts you plan to pay off. Having these ready can shorten the process considerably.
How our brokers can help
Active Mortgage is a team of brokers working with a range of lenders. We can review your situation, explain the options that apply to you and compare real offers side by side. There's no cost to talk with us, and you're never under pressure to proceed.
Common questions
Can I refinance with my current lender?
Yes, and sometimes that reduces costs. A broker can compare your lender's offer with others.
Will refinancing reset my amortization?
It can. Extending the amortization lowers payments but increases total interest.
How long does it take?
It depends on documents, the appraisal and the lender. Your broker can give you a realistic timeline.
Related tools and services
Ready to talk it through?
Book a free call with our team or start a pre-application when you're ready.