The benefits and drawbacks of refinancing your mortgage

As a homeowner, one of the biggest financial decisions you’ll make is deciding when to refinance your mortgage. Mortgage Refinancing can be a great way to lower your monthly payments, reduce your interest rate, and access your home’s equity. However, refinancing is not always the right choice for everyone, and there are some drawbacks to consider. In this blog post, we’ll explore the benefits and drawbacks of refinancing your mortgage, with a focus on the Vancouver Mortgage market.

What is Refinancing?

Refinancing your mortgage involves replacing your current mortgage with a new one that has different terms. This can include adjusting the interest rate, the length of the loan, or the type of mortgage you have. You may also choose to refinance to access the equity in your home, which allows you to borrow against the value of your property. Refinancing can be done with your current lender or with a new lender.

Benefits of Refinancing

Lower Interest Rates

One of the primary reasons people choose to refinance is to take advantage of lower interest rates. If interest rates have dropped since you took out your original mortgage, refinancing could allow you to lower your monthly payments and save money over the life of the loan. This is especially true if you have an adjustable-rate mortgage (ARM) and interest rates have risen since you first took out your loan.

Access Equity in Your Home

If you have built up equity in your home, refinancing can allow you to access that equity and borrow against it. This can be a great way to finance home improvements, pay off high-interest debt, or cover unexpected expenses. In Vancouver, where property values have been increasing rapidly in recent years, many homeowners have significant equity in their homes that they can tap into through refinancing.

Shorten Your Loan Term

If you have a 30-year mortgage but want to pay off your home sooner, refinancing to a shorter loan term can be a good option. By refinancing to a 15-year mortgage, for example, you can save thousands of dollars in interest over the life of the loan and pay off your home faster. This can be a smart choice if you’re nearing retirement age and want to own your home outright.

Drawbacks of Refinancing

Closing Costs

Refinancing your mortgage involves closing costs, which can add up to several thousand dollars. These costs can include appraisal fees, title fees, origination fees, and other charges. In Vancouver, where home prices are high, closing costs can be especially steep. It’s important to factor these costs into your decision when deciding whether to refinance.

Resetting Your Loan Term

When you refinance, you’re essentially starting a new mortgage, which means you’ll be resetting your loan term. If you’ve been paying off your current mortgage for several years, refinancing to a new 30-year mortgage means you’ll be adding years to your mortgage and paying more in interest over the life of the loan. It’s important to consider whether the savings you’ll get from a lower interest rate or accessing your equity outweigh the additional interest you’ll pay over a longer loan term.

Potential for Higher Monthly Payments

If you choose to refinance to a shorter loan term, your monthly payments will likely increase. For example, if you have a 30-year mortgage with a monthly payment of $1,500 and refinance to a 15-year mortgage, your monthly payment could increase to $2,500 or more. This can be a strain on your budget, so it’s important to make sure you can comfortably afford the new payments before refinancing.

Choosing a Mortgage Broker Vancouver

If you decide to refinance your mortgage, it’s important to choose the right Mortgage Broker Vancouver to help you through the process. A mortgage broker can help you compare rates and terms from different lenders, help you understand the costs and benefits of refinancing, and guide you through the application process. Here are some tips for choosing a mortgage broker in Vancouver:

  1. Look for a licensed broker – In British Columbia, mortgage brokers are regulated by the Financial Institutions Commission (FICOM). Make sure the broker you choose is licensed and in good standing with FICOM.
  2. Check their experience – Look for a Vancouver Mortgage Broker who has experience working with clients who have similar needs to yours. If you’re refinancing to access your home’s equity, for example, look for a broker who has experience with home equity loans or lines of credit.
  3. Read reviews – Check online reviews and ask for references from previous clients. This can give you a sense of the broker’s level of professionalism, responsiveness, and knowledge.
  4. Compare fees – Mortgage brokers typically charge a fee for their services, which can vary depending on the broker and the complexity of your refinancing needs. Compare fees from different brokers to make sure you’re getting a fair deal.


Refinancing your mortgage can be a smart financial move if it helps you save money on interest, access your home’s equity, or pay off your home sooner. However, it’s important to weigh the benefits against the drawbacks, including closing costs, a longer loan term, and potentially higher monthly payments. If you decide to refinance, choose a licensed mortgage broker in Vancouver who can help you navigate the process and find the best terms for your needs.

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