Can refinancing still make sense if I already have a low mortgage rate?

Short answer:
Yes, refinancing can still make sense even if you already have a low rate, depending on your goals, cash flow needs, and overall cost of borrowing.

Deeper explanation

Many Canadian borrowers assume refinancing is only worthwhile when rates drop significantly below their current rate. While rate savings can be one reason to refinance, it is not the only one - and often not the most important one.

Refinancing allows you to restructure your mortgage. That structure affects how interest is paid over time, how much flexibility you have, and how your mortgage supports the rest of your financial life.

Below are some of the most common reasons refinancing can still make sense with a low rate.

Accessing home equity

If your property has increased in value or you have paid down your mortgage, refinancing can allow you to access equity.

Common uses include:

• Renovations or home improvements
• Debt consolidation
• Investing or business opportunities
• Large planned expenses

Compared to unsecured debt, mortgage-backed borrowing often comes with lower interest costs and longer repayment flexibility. 

Improving monthly cash flow

Even without a major rate drop, refinancing can sometimes reduce monthly payments by:

• Extending the amortization
• Consolidating higher-interest debts into the mortgage
• Switching from variable payment volatility to fixed payment stability

Improved cash flow can create breathing room, especially during periods of rising household expenses.

Restructuring amortization or term length

Your original mortgage structure may no longer match your current stage of life.

Refinancing can help:

• Lengthen amortization to manage monthly affordability
• Adjust term length to balance flexibility and certainty

This is where cost of borrowing matters more than the headline rate.

Pros and cons of refinancing with a low rate

Pros:

• Access to lower-cost capital
• Improved cash flow or flexibility
• Opportunity to consolidate debt
• Better alignment with current goals
  

Cons

• Prepayment penalties
• Legal and appraisal costs
• Potential increase in total interest if amortization is extended

A refinance should always be evaluated net of these costs.

What borrowers often overlook

Many borrowers focus on the interest rate alone and overlook:

• Penalties and break costs
• The impact of amortization resets
• How long they plan to keep the mortgage
• Flexibility features like prepayment options

This is why we do not chase the lowest rate. We build the lowest cost of borrowing.

FAQs

Does refinancing reset my mortgage?
Yes, refinancing replaces your existing mortgage with a new one, including new terms and conditions.

Will refinancing hurt my credit?
There is usually a small, temporary impact from a credit check, but it is typically minimal.

Can I refinance without increasing my mortgage balance?
Yes. Some refinances are purely structural and do not involve taking out additional funds.

Practical checklist before refinancing

• Review your current penalty
• Clarify your short- and long-term goals
• Compare total interest costs, not just rates - I can help with that!
• Consider how long you plan to keep the mortgage

Support beats stress. Every time.

If you want help evaluating whether refinancing still makes sense for your situation, you can book a call at www.mortgagecall.ca or email [email protected].