This is the most traditional form of refinancing. It involves changing the interest rate, the loan term, or both, without taking any equity out of the property. For example, homeowners may refinance from a 5-year fixed mortgage to a new 5-year fixed mortgage at a lower rate, or switch from a 25-year amortization to a 20-year amortization to pay off the mortgage faster. The goal is typically to reduce monthly payments, pay less interest over time, or adjust the term to better match current financial objectives.

Cash-out refinancing allows homeowners to access the equity built up in their home. This is done by refinancing for a higher amount than what is currently owed on the mortgage and receiving the difference in cash. In Canada, this is generally capped at 80% of the home’s appraised value, minus the remaining mortgage balance. The funds can be used for home renovations, large purchases, investments, or other significant expenses.

Refinancing is also used as a tool for debt consolidation. Homeowners with high-interest debts—such as credit cards, personal loans, or lines of credit—can refinance their mortgage to consolidate these debts into one loan at a lower interest rate. This can reduce overall monthly payments and simplify debt management. It’s especially helpful for homeowners with significant home equity and stable income.

Sometimes referred to as a “switch” or “transfer,” this form of refinancing involves moving your mortgage from one lender to another at the end of your term, or even mid-term if the savings outweigh any penalties. Reasons for switching include better interest rates, more flexible features, or improved customer service. Homeowners should carefully consider prepayment penalties, legal costs, and whether the new mortgage product suits their needs before switching.

Before moving forward, take a detailed look at your current financial picture. This includes reviewing your monthly income, expenses, existing debts, and credit score. Understanding your financial health helps determine whether refinancing is realistic and beneficial. It also ensures that you don’t overextend yourself with a new mortgage structure.

Clarify your objectives before starting the process. Are you looking to reduce your monthly mortgage payments? Access the equity in your home for renovations or education costs? Pay off high-interest debt? Each goal may call for a different type of refinancing strategy, whether it’s rate-and-term refinancing, cash-out refinancing, or debt consolidation.

Your credit score plays a major role in the interest rates and terms you're offered. A higher score can open doors to better rates, while a lower score might limit your options or increase the cost of borrowing. Request a copy of your credit report from one of Canada’s credit bureaus (Equifax or TransUnion) and address any discrepancies before applying.

Don't settle for the first offer. Compare quotes from various sources, including traditional banks, credit unions, and alternative lenders. Mortgage brokers can also provide access to B lenders and private lenders, especially useful if you’re self-employed or have a lower credit score. Comparing options ensures you get the best possible terms for your unique situation.

Getting pre-approved gives you a clear idea of the rates, terms, and maximum amount you may qualify for. It also demonstrates to potential lenders that you’re a serious applicant and gives you leverage when negotiating. A pre-approval will typically involve a credit check and a basic review of your financial information.

Be prepared to submit several documents to support your refinance application. These typically include:

• Proof of income (recent pay stubs, T4s, or Notices of Assessment)
• Mortgage statement and property tax bill
• Business financials (if self-employed)
• Government-issued ID
• Property appraisal (may be required by the lender)
• Current home insurance documents

Once you've compared offers and selected a lender, you’ll proceed with the formal application process. Your lender may require an appraisal and legal documentation to complete the refinance. After all conditions are satisfied and paperwork is signed, your new mortgage will be registered, and the old one paid out—either with the same lender or a new one. Taking these steps carefully can help ensure your Vancouver mortgage refinance aligns with your financial goals while minimizing unexpected costs. A licensed mortgage professional can also guide you through the entire process to make it as smooth and informed as possible.