At McGarr Realty we believe every buyer should be well-educated on the concept of refinancing. Whether you’re a smart homeowner or a real estate investor, it is critical you understand the power of refinancing your mortgage.

Re-evaluating your mortgage(s) each year could save you hundreds or even thousands of dollars.

In this blog, we’ll be discussing what it means to refinance your mortgage, how to do so, and its many benefits.

What is refinancing?

According to the Canadian Mortgage and Housing Corporation (CMHC), refinancing a mortgage involves taking out a new loan to pay off your original mortgage. This new mortgage can be with your existing lender, or you can shop around for a new lender. The refinance can happen at any point and will include a set of new terms and a different interest rate.

Generally, when refinancing a mortgage, the goal is to reduce the interest rate, change the loan terms, or switch from an adjustable-rate mortgage (ARM) to a fixed-rate loan.

Reasons to refinance a mortgage

Save money

If your credit has improved since applying for your mortgage, refinancing may secure you a better interest rate.

Refinancing may also make your mortgage payments more manageable. For instance, if you’re refinancing your mortgage to a longer loan term, this can help lower your monthly payment. But keep in mind, a longer loan term means you’ll probably end up paying more in interest over the years.

Shortening your loan term, on the other hand, may raise your monthly payment but it will save you on interest and allow you to build equity in your home faster.

Cash-out equity

The equity in your home is the difference between the value of your home and how much you owe on your mortgage. Refinancing your mortgage allows you to access this money. It can be used to invest in a new home, pay off credit card debt or however else you see fit.

How do you refinance your mortgage?

The process of refinancing a mortgage is similar to the process you took to obtain one. It starts with shopping around and comparing interest rates and other terms with various mortgage lenders to see which one will give you the best bang for your buck. You’ll then want to compare this loan to your current loan to see if it makes sense to switch.

As you go through the process, keep an eye on closing costs. For example, if refinancing your loan with a new lender costs $5,000 upfront and your new monthly payment is just $100 lower than your current rate, you’ll need to stay in the home for at least 50 months to make the switch worth it.


If you’re looking to use the equity from your mortgage refinance to invest in a new property, we can help! Our team of trusted real estate agents would love to show you the best houses for sale in the Niagara Region.

Call our office at 905-687-9229 in St. Catharines, or 905-468-9229 in Niagara-on-the-Lake. You can also send us a message on our contact page, HERE.

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