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Mortgage Refinance

Learn what it means to refinance your mortgage loan and how this could help you reach your goals.

What is mortgage refinance?

Refinancing your mortgage means renegotiating your existing mortgage loan agreement. You might do this to consolidate debts, or you could use the equity in your property to increase your mortgage loan amount for large expenses.

By refinancing at the end of your current mortgage term, you may be able to avoid prepayment charges.

Should I refinance my mortgage?

Whether it’s a TD Mortgage or a TD Home Equity FlexLine, refinancing can help with certain goals:

  1. Debt consolidation. Merge higher interest debts into one manageable payment with a lower interest rate.

  2. Home renovations. Get the money you need to renovate or make repairs.

  3. Investing. Take advantage of an investing opportunity (speak to your tax advisor first).

The pros and cons of refinancing

Pros of refinancing

Cons of refinancing

Access the equity you’ve built up in your home.

Increasing the amount you are borrowing may lengthen the time it takes to pay off your mortgage.

Consolidate your debts and lower your overall interest rate.

Your overall interest rate might be lower but the amount owing on your mortgage may be higher.

Possibly get a lower interest rate and pay less for your mortgage over time.

There may be additional costs, including a prepayment charge.

Consider the cost to refinance

Before you decide on refinancing your TD Mortgage or a TD Home Equity FlexLine, be sure to look at all potential costs. Prepayment charges may apply if the agreement is ended before the term is done. There may also be associated fees for mortgage registration and property valuation.
But if you’re able to take advantage of lower interest rates, your overall savings may make it worthwhile.

How much can I borrow through a refinance?

Over the years, you’ve been building up equity in your home by paying down a portion of the principal with every payment. The amount of money you can borrow by refinancing is up to 80% of the equity you have in your home, subject to any additional charges.

Frequently Asked Questions

There are a number of different ways to determine the estimated market value of your home. Many realtors will help you work out a recommended selling price based on recent sales in your neighbourhood. There are also a number of online real estate services which track real estate sales and provide daily updates on estimated property values.

While you can pay to have your home professionally appraised at any time, TD requires its own appraisal during the application process.

While you should only ever refinance your home with good reason, there are no rules that limit how often you can refinance. Lenders, however, will typically set a limit. Keep in mind that your credit report will be pulled each time you refinance, and when this happens too frequently it can negatively affect your credit score. Since your credit score is also a factor in a lender’s decision to approve your refinancing, a lower score would also lower your chances of approval.

Renewing your mortgage means staying with your current lender for another term. You’ll have an opportunity to renegotiate your interest rate and term, and you won’t need to re-apply.

When you refinance, you are paying out your existing mortgage in order to negotiate a new mortgage loan agreement. This is usually because you want to access the equity in your home or lower other borrowing costs. There may be prepayment charges depending on when you choose to refinance.

When interest rates fall, the possibility of getting a lower mortgage rate is a strong reason to consider refinancing if you need additional funds. A reduction in your mortgage rate could lead to significantly lower monthly payments.

However, you must factor in the costs of ending your current mortgage, including any prepayment charges, as well as how long you expect to live in your home. Only then can you determine whether it’s worthwhile to refinance at a lower rate.

Other useful information

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