Mortgage Refinance Guide

We have created a mortgage refinance guide to help you navigate the process and avoid the common mistakes people often make.

Refinancing your mortgage allows you to borrow against the equity in your home for purposes such as renovations, investments, debt consolidation, and more. You are allowed to refinance at any point during your term, although there are different costs associated with it at different times.

Before You Get Started

It’s important to have a clear picture of how much money you require before you begin the refinancing process. Depending on the purpose of the additional funds, you may require a little or a lot, so having a professional and accurate estimate on potential renovations or investments can be very helpful.

When applying to refinance, you’ll require an appraisal on your home. Banks will lend you a maximum of 80% of the appraised value, so when you subtract the amount owing on your mortgage from that 80%, you can roughly determine how much you are eligible to receive.

The application process is the same as when you initially secured your mortgage. Lenders will consider your income, debts, and credit rating in conjunction with the property value when determining how much money they’re willing to give you.

If you refinance mid-term you may be faced with a discharge penalty, which is not the case once your mortgage has matured.

In the case of a mid-term application – and depending on the type of mortgage and rate – you’ll need to decide between blending your current rate, adding a mortgage component, or taking on a whole new mortgage. Factors such as potential discharge penalties, your remaining term and prevailing market rates will all affect your decision. It’s a straightforward financial calculation that we are happy to help you with.


Steps to Renewing

We have outlined the key steps to refinancing your mortgage to ensure you make the best financial decisions.

Step One

Refinancing at the Right Time


You can refinance at any time during your term or when your mortgage matures, but it’s important to understand the benefits and costs of doing so.

In some cases, it may make sense to break your mortgage to access a better interest rate if the penalty is lower than the cost of breaking the term. Conversely, if you can’t make the penalty back, increasing your existing mortgage (we call this “blending”), could be a better option.

When you refinance a mortgage, you start paying interest immediately. If you want to access the money right away, then you’ll typically find this acceptable. But, if you don’t need it right away, you may want to consider options with components, such as a re-advanceable mortgage.

Once your mortgage has reached maturity, there are no penalties.

There are a number of reasons why people choose to refinance their mortgages, but here are some common examples:

  • Debt Consolidation
  • Investments (stocks, bonds, mutual funds, RRSPs, etc.)
  • Renovations
  • Property Investment
  • Provide Family Member with a Down Payment
  • Purchase a Vehicle

Assuming you qualify for this extra amount of money, the maximum you can borrow is 80% of the appraised value of your property, which you can determine through an assessment.

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Step Two

Pick Your Rate and Term

By having a clear idea of your personal and financial goals, you’ll be better able to select the type of interest rate and term you want. We can walk you through the process and answer any questions you may have.

Step Three

Apply For Refinancing

Refinancing applications are very straightforward as long as your paperwork is in order. You’ll need to update your mortgage profile to provide current information, such as your employment and income information, debt and credit status, and current property value. We can help you by outlining everything that is required.

When you apply online, you’ll receive an immediate response that includes a list of required documents based on your profile.


Frequently Asked Questions

We have compiled a list of the most common questions you may have during the process of refinancing your mortgage.

Who is Spin Mortgage?

We’re an online mortgage brokerage with licensing offices in British Columbia, Alberta and Ontario and have been operating since 1998. We handle one of the largest annual per-broker volumes in Canada through our online platform, which we have invested in heavily to deliver a mortgage process that is intuitive and easy to operate. We provide clients with the freedom they need to access mortgages on their terms.

Why the name SPIN?

We love bikes and all things bike-related. During our development phase, our team was enjoying a ride up Mount Fromme in North Vancouver and the idea for the name landed. It made sense to us and seemed to encapsulate a lot of our philosophies of long-term, repeat client relationships and full-service. We still start and finish most days on our bikes and most of our great ideas are conceived on two wheels.

How do I Apply?

We’ve created a quick apply form that can typically be filled out in about five to ten minutes. If you don’t have all your information handy, no problem. Our applications have a “save for later” option that allows you start off from where you finished without having to begin again.

Why Online vs Traditional Broker?

The process for applying for a mortgage is the same, whether you wait inside an office to do it or do it online. We understand that our clients are busy and want to eliminate the unnecessary time constraints of in-person meeting. We can typically tell you in minutes what you can afford, rather than days or weeks down the road when you’re able to schedule an appointment that works for you and a traditional broker. Our smaller footprint allows us to provide better rates and service than traditional channels, which have high overhead costs for offices, support staff and maintenance.

Which Are Better: Banks or Brokers?

Naturally, we believe that Brokers are better, since banks only have access to their own in-house mortgage products and typically have limited information on what else exists. Brokers have access to a multitude of products and lenders, which allows us to match your deal with the lender that is best suited for your borrowing profile and goals.

What is the Difference Between a Closed and Open Term?

Simply put, a Closed Term will incur a penalty fee to discharge it during the term, while an Open Term will not. Rates are generally lower for Closed Terms because of the potential fees incurred when discharging during term. The higher rates associated with Open Term mortgages can make sense if you’re carrying your mortgage for a very short term with the intention of discharging

What is the Difference Between Fixed and Variable?

A Fixed Rate means that your interest rate remains the same throughout the term of the mortgage.A Variable Rate implies that your rate and payment can change throughout your term. Your borrowing profile, risk tolerance, and economic conditions will determine which is a better fit for you.

What is A Standard Mortgage Penalty?

A Standard Mortgage Penalty can be levied if you break the terms of your mortgage, such as deciding to sell a property before the term is up. There are Standard Mortgage Penalties and Restricted Mortgage Penalties. A Standard Mortgage Penalty for a variable rate mortgage will never exceed three months’ interest. A Standard Fixed Rate penalty will be the greater of three months’ interest or the interest rate differential (IRD), which can be substantial. Essentially, the bank will take a market rate for the number of years remaining in your term and compare it to your rate. This difference will be multiplied by your outstanding mortgage balance and then by the amount of months remaining in the term. Note: all lenders calculate this differently, so it’s important to know where your lender stands. Restricted (non-standard) Mortgage Penalties can vary significantly. They can be an arbitrary percentage of your outstanding mortgage or change depending on the type of transaction.

What is a Sliding Scale Mortgage Rate?

Lenders typically base their mortgages using a sliding scale. There are several variables that can affect the scale, such as property type, geographic location (urban or rural), or projected growth. Each lender’s scale is different, so it is important to know who to access to best achieve your goals.

What’s the Difference Between A Bank and A Mortgage Lender?

Mortgage Lenders, commonly referred to as Monolines, specialize solely in mortgages. They are typically underwritten by banks, but have more attractive rates due their singular focus. Banks do handle mortgages but also a broad range of other, non-related services, which often adds to their mortgage lending fees.

What’s is the Difference Between A Full-Feature and A Restricted Mortgage?

A Full-Feature Mortgage has maximum prepayment privileges, is portable, assumable, and has standard discharge penalties and policies. A Restricted Mortgage can impose a variety of limitations on customers, some of which are material. Increased penalties, clawbacks, stipulations that limit your options and flexibility are restrictions that generally don’t make sense for most home buyers and can create unwarranted complications (it’s important to note that the majority of the lowest mortgage rates seen online are restricted).

How Often Can I Pay My Mortgage?

You can pay weekly, bi-weekly, semi-monthly or monthly. This decision comes down to what suits you and your income situation best. Let us know and we’ll happily adjust it. Alternatively, you can contact the lender anytime after funding and they can change it as well. It’s flexible and can evolve over time as your specific circumstances change.

What Are the Benefits of Bi-Weekly Payments?

Bi-weekly payments have a number of benefits, but the largest is that over the space of a year you wind up making one additional payment. It might not seem like a lot, but over the term of your mortgage, it can save thousands of dollars.

Can I Make Extra Payments On My Mortgage? Is there is penalty?

It depends. Typically, lenders offer anywhere from 5% to 20% pre-payments per year based on the original mortgage amount as well as the ability to increase payments by 5% to 100%. The importance of this will vary amongst borrowers based on how much extra cash they’ll actually have to pay it down. If you have the ability to take advantage of this combination, you’ll likely be able to pay of the mortgage in it’s entirety without any penalty before the term is over.

Is Spin Mortgage Lending Me Their Money?

No. We’re a broker, so our job is leverage our knowledge, relationships with lenders and understanding of the market to get our clients the best possible rates.

What Is the Difference Between Term and Amortization?

Term is the contract under which you are bound when you sign up for a mortgage. For example: a five-year variable closed mortgage. Amortization is the number of years it will take to pay off your mortgage. Amortization is somewhat irrelevant as you can effectively lower it by increasing your payments. For example, you can lower a 30-year amortization, by increasing your payments according to the lender’s policy. In today’s mortgage world, the maximum amortization period is 25 years if your down payment is less than 20%, and 30 years if it’s more.

What’s An Effective Rate?

Often times, we’ll offer an effective rate of “x” with a contract rate of “y”. Basically, this means we’ve discounted the rate the maximum we can and are effectively lowering it by way of a cash back at closing to make up the difference in interest.

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