At some point during the life of your mortgage, after you have built up some equity in your home, you may choose to refinance your mortgage to gain access to cash for renovations, travelling, paying off debt, or even purchasing a vehicle. Another reason for refinancing your mortgage might be to take advantage of lower interest rates. Lower interest rates mean lower payment amounts and improved cash-flow. Provided the value of your home exceeds the mortgage balance remaining, refinancing may be possible.
Ideally, the time to refinance your mortgage is at renewal time, when you will not be subject to a penalty. However, you will still be subject to legal and appraisal fees because you are arranging a new mortgage. If you choose to refinance mid-term, the costs associated with breaking one mortgage agreement and entering into another will likely include a penalty fee in addition to legal fees and appraisal fees. Measure these costs against the amount of money you are gaining access to, and then make your decision about refinancing.
Current mortgage rules in Canada dictate that a home may be refinanced up to a maximum of 80% of its value.