When Should You Refinance Your Mortgage?

Refinancing makes sense if you can reduce your rate by 0.5-1% and plan to stay in your home for at least 3 years. A $300,000 mortgage at 5% costs ~$16,000/year in interest. Refinancing to 4% saves $3,000/year — breaking even on $5,000-6,000 in refinancing fees in 2 years.

Refinancing Costs in Canada

• Breaking the mortgage: Interest rate differential (IRD) or three months' interest, whichever is higher
• Appraisal: $300-500
• Legal fees: $400-800
• Property insurance and title: $100-300
• Total typical cost: $2,000-8,000 depending on mortgage size

Fixed vs Variable Rate Refinancing

If your current rate is variable, switching to fixed locks in your rate. If variable rates are expected to rise, fixing now can save thousands. However, if you expect rate cuts, holding variable may be better.