Key perspective
Refinancing replaces or increases existing mortgage debt. It should be evaluated as a complete transaction, including penalty, closing costs, new payment, total interest, debt reduction and the period required to recover the upfront cost.
Common reasons to refinance
Borrowers refinance to reduce cost, consolidate debt, access equity, complete renovations, pay tax obligations, resolve arrears, fund a business need or exit a private mortgage.
Equity and available proceeds
The available amount depends on lender-accepted value, maximum LTV, existing registered debt and all closing deductions. Gross equity is not the same as cash available to the borrower.
Penalty and break-even analysis
Breaking an existing mortgage can trigger a penalty. A refinance is financially stronger when the payment or interest benefit, debt consolidation benefit or strategic need justifies the full transaction cost.
Qualification after circumstances change
A borrower may have more equity but weaker income or credit than at the original approval. The lender category and rate therefore depend on the current file, not the old mortgage.
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