Mortgages are big commitments, with most lasting more than 20 years! Luckily, the mortgage you start off with doesnt have to be the same mortgage you finish with. Refinancing is a tool you can use to reshape your mortgage to better suit your needs.

Refinancing your mortgage can save you money in the long run, but its essential to understand how it works before considering it for yourself. This article has everything you need to know about mortgage refinancing, how it works, and what it can do for you.

(If youre considering refinancing your mortgage, its worth getting advice from a mortgage professional, such as a mortgage broker . Theyll be able to assess your personal situation and help you understand your options at no cost.)

What is a mortgage refinance?

A mortgage refinance lets you end your current mortgage and start a new one. You can choose to do this with your current lender or another one. Doing so lets you apply for a new rate, change the conditions of your mortgage, and borrow additional cash by accessing the equity in your home .

A mortgage refinance can be done at any time, either during or at the end of your current mortgage term. If you refinance in the middle of your current term, youll be breaking your mortgage early and will thereby incur a prepayment penalty.

Its important to know the difference between a refinance and a renewal. A mortgage renewal can only be done at the end of your current mortgage term. At renewal, you can choose a new rate and switch to a different lender. However, you wont be able to change any of the conditions of your current mortgage or access any of the equity in your home.

If you need to make changes to your mortgage conditions, access the equity in your home, or make changes to your rate or lender in the middle of your term, then youll need to refinance your mortgage.