Breaking your existing mortgage before the term ends to access equity, change your rate, or consolidate debt.
Refinancing before your term ends triggers a prepayment penalty (three months interest for variable, or Interest Rate Differential for fixed). The maximum refinance LTV is 80% of your property value. Common reasons to refinance: debt consolidation (rolling high-interest debt into your mortgage), home renovations, accessing equity for investment, or separating from a partner. The savings from a lower rate must outweigh the penalty and legal costs to make financial sense.
Related terms: Prepayment Penalty | Loan-to-Value (LTV) Ratio