What refinancing actually means (and why you'd do it)
Refinancing your mortgage means taking out a new loan to pay off your existing one. You might do this to lower your monthly payment, lock in a better rate, change how long you'll be paying (the loan term), or pull equity out of your home to use for something else.
It can be a smart move — or an expensive detour. The key is knowing what you're trading and what you're getting in return.
How much refinancing costs in Canada
The cost to refinance depends on your lender, the type of mortgage, and how much you're borrowing. You'll typically pay legal fees, an appraisal fee, and lender fees.
All in, expect somewhere between $1,500 and $3,000. That's money out of pocket (or added to the loan), so you'll want to make sure the savings or the equity you're unlocking are worth more than the bill.
When you can refinance
The general rule in Canada is that you can refinance once you've made at least six payments on your current mortgage. Some lenders have stricter timelines, so check with yours before you start the process.
There's no hard rule on how long you need to own your home first. But if you refinance too soon after your original mortgage, the fees can eat up whatever you save on your payment. Do the math.
The basic test: will you actually save money?
The simplest reason to refinance is to get a lower interest rate than what you're paying now. That means a smaller monthly payment and less interest over the life of the loan.
Refinancing also makes sense if you want to change your loan term — say, shorten it to pay off your mortgage faster — or if you need to tap your home equity for a renovation, debt consolidation, or another big expense.
The downsides you need to know about
Refinancing isn't free, and it's not always a win. You'll pay closing costs (see above), and if you extend your loan term to lower your monthly payment, you could end up paying more interest overall — even at a lower rate.
There's also a potential hit to your credit score, since you're taking out a new loan. And if the numbers don't work in your favour, you've just paid a few thousand dollars to move sideways.
What credit score you'll need
Most lenders want to see a credit score of 680 or higher to approve a refinance. Some will ask for more, depending on the mortgage type and how much equity you have.
If your score is lower, you may still have options — but expect stricter terms or a higher rate.
Do you need a down payment to refinance?
No. The new loan pays off your old mortgage, and you use the equity you've built in your home to secure it. You're not buying the house again — you're just resetting the loan.
What to do next
If you're thinking about refinancing, start by figuring out what you want: a lower payment, a shorter term, or access to equity. Then compare what you'll pay in fees to what you'll save (or gain). If the numbers work and your lender says you're eligible, it might be worth it.
And if you're not sure where the numbers land, talk to someone who can walk you through your actual situation — not a generic online calculator.
