Whether it’s because your mortgage contract is coming to term, or because you’re considering breaking it before the maturity date, here are a few tips.
Refinancing your mortgage means renegotiating a new mortgage loan, usually with a different amount, term, and interest rate, to replace the existing loan. This can be done with your current lender or with a new one.
You can refinance:
- when the mortgage comes to maturity (generally after 2, 3, or 5 years); or
- before the end of term, but in this case penalties typically apply.
1. The Most Common Reasons to Refinance
- Obtain a better interest rate.
- Stabilize your mortgage payments (switch from a variable rate to a fixed rate).
- Access equity to fund a project (renovation, purchase, investment).
- Consolidate higher interest debts.
Interest rates in 2025 have been less volatile than in 2022–2023, but they continue to be higher than before the pandemic. As a result, fewer people opt to refinance to reduce their rate; however, refinancing to stabilize payments, finance a project, or consolidate debts remains very relevant.
2. Analyze Your Financial Situation
Before you even meet with a lender, take the time to assess your financial situation:
- How much do you still owe on your existing mortgage?
- How much is your home worth today?
- Do you have any higher interest debts (credit cards, auto loan, etc.)?
- What is your monthly income and what are your fixed expenses?
- Do you have stable employment?
This information will help you determine if refinancing is really to your advantage.
For example, if your home has increased in value, you could unlock more equity. This amount will then allow you to pay off debts with higher interest rates than your mortgage.
3. Check Your Credit Score
Your credit score plays a crucial role in securing refinancing approval and in determining the interest rate you will be offered. In 2025, amid tightening credit conditions, lenders are growing increasingly cautious.
Before you submit your application:
- Consult your file with Equifax or TransUnion. Certain financial institutions also provide this service directly on the application. For instance, at Desjardins, your credit score is available through AccèsD.
- Correct any errors (like a small, forgotten unpaid debt that lowers your score).
- Avoid taking on any new, large debts just before you refinance your mortgage.
- If your score is low (under 580), think about raising it first.
4. Shop for Options and Compare Lenders
Don’t limit yourself to your current bank. When refinancing, you’re allowed to shop around:
- Contact several financial institutions.
- Compare interest rates as well as administrative fees, prepayment penalties, and terms and conditions.
- Consider talking to a mortgage broker who can look at various loan options for you free of charge (they earn a commission from the lender).
5. Prepare the Necessary Documents
Refinancing your mortgage requires a comprehensive analysis of your profile. Here is a list of the documents you will probably have to provide:
- Proofs of income (payment stubs, notices of assessment)
- Current debt statements
- Bank statements
- Property valuation (mandatory for certain lenders)
- Proof of homeowner’s insurance
- Information about your existing mortgage
Have everything ready to expedite the process.
6. Take the Associated Fees Into Account
Refinancing may involve paying fees. It’s therefore essential that you know what these are before you sign anything. For example, in some cases these fees may include:
- Mortgage breach of contract penalties (if refinancing before the end of term)
- Property valuation fees
- Legal fees (notary),
- Administrative fees for the new mortgage
- Ask the lenders questions to make sure you understand everything clearly. Above all, be certain the savings generated by refinancing offset these costs.
7. Anticipate Economic Trends
A good time to refinance may be right after a drop in interest rates or before an expected hike.
If you’re thinking about breaking your mortgage, follow developments in:
- the Bank of Canada’s policies
- prime interest rates
- the inflation rate
To conclude, the right loan for you is the one that meets your current and future needs. Good luck!