Refinancing and Home Equity: Know the Real Cost

Your home's equity can pay off high-interest debt, fund a renovation or lower your monthly payments. Before you sign, you need to know what it costs and how much you'll owe afterward.

The short answer: Refinancing isn't the same as renewing. A renewal just starts a new term on what you already owe. A refinance changes the loan itself, like taking cash out or restructuring your payments, and it needs a new approval.

When it makes sense

Most of our clients refinance to:

Consolidate credit cards, loans and lines of credit into one payment
Fund a renovation
Free up monthly cash flow

Know the amount you need and why. Your equity is your home's value minus what you owe on it. That's not automatically the amount a lender will give you.

Costs to factor in

A penalty for breaking your current mortgage, if you're mid-term
Appraisal and lawyer fees
Lender, broker and registration fees, where they apply
Interest on any fees added to the new mortgage

Rolling fees into the mortgage means less cash up front, but you still pay them, with interest.

Compare before and after

Write down your current balance, rate, payment and how many years you have left. Then compare that to the new loan, including the cash you're taking out and all the costs. A lower rate doesn't help much if you're borrowing a lot more or paying for a lot longer.

What debt consolidation changes

When credit card or loan debt moves into your mortgage, it's now secured by your home. Your payment usually drops, often by a lot, but you may pay it off over a longer period.

The clients who get the most out of it use some of the monthly savings to pay down the mortgage faster, and they don't run the cards back up.

Other options

Depending on your situation, a second mortgage or HELOC might fit better than a full refinance, especially if you have a great rate on your first mortgage or a big penalty to break it. We run all the options side by side so you can see the real numbers.

Related guides

Let's talk it through

Book a call and we'll go over your options with you.

Alberta: 587-900-0036 | BC: 604-200-3228

These guides are general information, not a mortgage offer or personal advice. Every approval depends on lender review of your income, credit, property and documents. Elevate Lending, powered by BRX, serves clients in Alberta and British Columbia.