Services · 02 · Refinance
Change the mortgage to fit the plan.
Lower the cost, combine debts or change the terms. First we check what it costs to break the mortgage you have.
02
What it is
Refinancing replaces your current mortgage with a new one: a different amount, rate, term or amortization. It can be done at any time, but breaking a mortgage before the end of its term usually means a prepayment penalty.
A refinance is worth doing when the benefit is larger than the cost. I put the two side by side in writing: the penalty, legal and appraisal costs on one side, the interest saved or the monthly cash flow gained on the other.
Who it is for
- Owners carrying high-interest cards, lines of credit or car loans
- Owners whose rate is well above today's rates
- Households that need a lower monthly payment
- Owners who want to add someone to the mortgage or take someone off
How it works
Get the penalty in writing
Ask your lender for the payout figure, or let me request it for you.
Compare
Your current mortgage against two or three alternatives, with every cost counted.
Approval
The new lender reviews income and credit and orders an appraisal.
Closing
A lawyer or title service pays out the old mortgage and registers the new one.
Documents to have ready
A starting list. Your own checklist is built after the first conversation.
- Current mortgage statement
- Property tax bill
- Pay stub and employment letter, or two years of tax returns
- Statements for the debts to be paid out
- Home insurance policy
Common questions
How much can I borrow?
Up to 80% of the home's appraised value, minus what you still owe. A refinance cannot be insured, so it follows uninsured rates and rules, and you have to pass the stress test again.
What will the penalty be?
A variable mortgage usually costs three months of interest. A fixed mortgage costs the greater of three months of interest or the interest rate differential, which can be large when rates have fallen since you signed. Ask your lender for a written figure.
Should I wait for renewal instead?
If your term ends within a few months, waiting can avoid the penalty altogether, and many lenders allow an early renewal near the end of the term. The comparison shows which route costs less.
Refinance or home equity line of credit?
A refinance gives you a lump sum at mortgage rates with a fixed repayment schedule. A line of credit is drawn as needed, usually at a higher variable rate. See equity take-out for the comparison.
Talk it through with Hamed.
Eight questions, about a minute. Hamed reviews your answers and calls you, usually the same business day.