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There are a number of reasons why refinancing your mortgage before your current term is up makes good financial sense. The most popular ones include taking advantage of lower rates or using your home equity to consolidate debt, fund renovations, ease cashflow or even purchase another property.


It’s important to keep in mind, however, that breaking your current mortgage before the term is up and refinancing into a new mortgage means you’ll face a penalty. The penalty will vary based on your lender as well as the amount of time you have remaining on your current term. Of course, the longer the remaining term, the stiffer the fees for breaking your mortgage. 


Your mortgage agent can advise you on whether a refinance makes sense after looking at the payout penalty on your current mortgage and weighing it against the benefits of gaining access to your home’s equity now.


In many cases, refinancing right away is worthwhile. Other times, waiting a little longer so you’re closer to the end of your current mortgage term makes the most sense for your situation. Either way, you’ll know where you stand and can make future plans accordingly. 


What happens during a refinance?

When refinancing a mortgage, you’re taking out a new loan and paying out your existing one. There’s no set time that it takes to refinance a mortgage. It can range from a couple of weeks to a month or longer depending on the lender and how busy they are at the time you’re looking to refinance. Other factors, such as waiting for an appraisal on your home, may slow down the process.


Have questions about whether now’s a good time for you to refinance your mortgage? Answers are a call or email away!