Refinancing

The process of replacing an existing mortgage with a new mortgage — either with the same lender or a different one — typically to obtain a lower interest rate, access built-up equity (cash-out refinance), change the amortization period, or consolidate debt. In Canada, refinancing outside of the renewal date may trigger a prepayment penalty, often calculated as the greater of three months’ interest or the Interest Rate Differential (IRD). The IRD penalty can be substantial with fixed-rate mortgages.