The last few months of the year have a funny way of making money disappear.
Holiday shopping. Travel. Property taxes. Home repairs. Credit card balances. Kids' activities. That one appliance that apparently waited all year to choose December for its dramatic exit. 😑
But before we talk about finding extra money for Christmas, let me be very clear:
I am not suggesting that you refinance your home to pay for Christmas.
What I am suggesting is that year-end is a very good time to look at your entire financial picture, particularly if your mortgage is coming up for renewal, your monthly debt payments have become uncomfortable, or you've built substantial equity in your home.
Sometimes your mortgage is simply a mortgage.
Sometimes there are opportunities worth exploring.
Let's find out which one applies to you.
Is Your Mortgage Renewing Soon?
If your mortgage is renewing between now and early 2027, you may receive a renewal offer from your existing lender.
And it can be wonderfully easy.
Here's your rate.
Here's your payment.
Choose your term.
Sign here.
Done.
Except easy doesn't necessarily mean it's the right option for you.
The Financial Consumer Agency of Canada recommends shopping around a few months before renewal and notes that you may be able to negotiate a better interest rate than the one initially offered in your renewal letter.
Before signing, I want to look at more than the headline rate.
We can review your offered rate and payment, remaining amortization, fixed versus variable options, different term lengths, available lender options and, most importantly, what has changed in your financial life since you arranged your last mortgage.
You may discover that your existing lender's offer makes perfect sense.
Great.
Then you can sign it knowing you actually compared your options.
What If Your Mortgage Isn't the Problem, but Everything Around It Is?
This is where the conversation gets more interesting.
Perhaps your mortgage payment is manageable, but you're also carrying:
Credit card balances
A line of credit
Vehicle financing
Home improvement debt
Other higher-interest obligations
Individually, every payment might seem manageable.
Collectively?
Your bank account may be getting mugged on the first of every month. 😬
If you're a homeowner with sufficient equity, refinancing may provide an opportunity to consolidate some higher-interest debt.
The potential advantage isn't simply having fewer bills.
It's looking at whether we can improve your overall monthly cash flow and cost of borrowing.
But there is an important catch.
Lowering your monthly payments does not automatically mean you're saving money.
FCAC cautions that debt consolidation can save interest when higher-interest debts are moved to a lower-interest product, but extending the repayment period can also mean paying more interest over time.
That's why I don't want to look only at the shiny new monthly payment.
I want to look at the whole picture.
Could Refinancing Free Up Monthly Cash Flow?
Let's imagine someone has a mortgage plus several other debts.
They're making the payments. Nothing is necessarily in crisis.
But every month feels tight.
If refinancing allows some of those higher-interest obligations to be consolidated, their total monthly payments could potentially decrease.
That could create additional room in the household budget for savings, emergencies, investments or simply not feeling like every unexpected expense requires a credit card.
But before recommending that strategy, I want to know:
What does it cost to break the existing mortgage?
What interest rates are available?
How much equity is available?
What will the new mortgage payment be?
How long will the debt now take to repay?
How much interest will be paid over that period?
And perhaps the most important question:
Does refinancing actually leave you better off?
If it doesn't, I don't want to do it.
What About Taking Money Out of Your Home?
This is another conversation I'm having with homeowners.
Property values have changed considerably over the years, and some homeowners have accumulated substantial equity.
That equity may potentially be accessed through refinancing or other borrowing options, subject to qualification and lender requirements.
That doesn't mean your house has turned into an ATM.
Equity is wealth you've built. I want to treat it accordingly.
There can, however, be legitimate reasons to investigate accessing it.
You may be considering a major renovation or necessary home repair.
Perhaps you're helping a child with education or another significant family expense.
Maybe you're dealing with costs associated with a separation.
You could be investing in a business or facing another major planned expense.
The question shouldn't begin with:
“How much money can I take out?”
It should begin with:
“What am I trying to accomplish, and is using home equity an appropriate way to accomplish it?”
Those are very different conversations.
Renewal and Refinance Aren't the Same Thing
This distinction is important.
A straightforward mortgage renewal or lender switch, where you aren't increasing the mortgage balance or amortization, is different from refinancing your mortgage to borrow additional money.
For qualifying uninsured straight switches between federally regulated lenders, OSFI no longer prescribes the Minimum Qualifying Rate when the loan amount and remaining amortization aren't increased.
If you're refinancing and increasing your mortgage, however, normal qualification requirements generally apply. For uninsured mortgages subject to OSFI's prescribed Minimum Qualifying Rate, borrowers currently qualify at the greater of the contract rate plus 2% or 5.25%.
That's one more reason to review your situation rather than assuming what's possible.
So Why Am I Talking About This Before Christmas?
Because I'd rather have this conversation before the expensive season than after it.
If your mortgage is renewing, let's review it before you automatically sign.
If your household cash flow has become uncomfortable, let's investigate why.
If you're carrying higher-interest debt, let's see whether restructuring makes mathematical sense.
If you need access to money for a legitimate upcoming expense, let's explore the available options and their costs.
And if I run everything and discover that your existing mortgage should be left completely alone?
That's a perfectly good outcome.
Knowing that you're already in the right place is valuable information too.
Let's Start With a Mortgage Check-Up
You don't necessarily need to begin with a full mortgage application.
If you'd like me to take an initial look, start by gathering:
Your latest mortgage statement
Your mortgage renewal date, if applicable
Approximate balances and payments on other debts
A general idea of what you'd like to accomplish
From there, we can determine whether there's enough opportunity to justify going further.
No assumptions.
No “everyone should refinance” nonsense.
Just your mortgage, your financial picture and some actual numbers.
Before Christmas gets expensive, let's see whether your mortgage deserves another look.
If your mortgage is renewing, message me “RENEWAL.”
If you're interested in refinancing, debt consolidation or improving monthly cash flow, message me “CASH FLOW.”
I'll help you figure out the next step.
Charlotte Ferguson
Mortgage Agent Level 2 | M08009211
Dominion Lending Centres National Ltd. #12360
Mortgages by Charlotte
This article is for general information only. Mortgage solutions are subject to borrower and property qualification and lender guidelines. Refinancing may involve penalties, fees, a new amortization period and increased total borrowing costs. Reducing monthly payments does not necessarily reduce the total cost of borrowing.