Refinancing During High Interest Rates: Is It Worth It?

While conventional strategies focus on refinancing during lower interest rates, you may see benefits from refinancing during periods of high interest rates as well. Whether it is to cash out or consolidate debt, you can end up saving or getting better terms when you check your refinancing options.

You should always consult with an industry professional such as via sHelto. You can reach out to our experts to learn more about the best options in Canada for refinancing, regardless of what your current mortgage terms are.

Let’s explore a step-wise process to understand refinancing during high interest rates better. We should also focus on refinancing as a strategic tool to ultimately save more and acquire better terms.


Step 1: Understanding high interest rates

High interest rates on mortgage loans indicate that it may cost higher per month for borrowers over the period of the mortgage. Whether you’re in a fixed or variable mortgage rate, your monthly payment may be higher with interest rates rising.

Your ability to save monthly, especially if you have other financial obligations, will be impacted significantly over time. The key decisions made by the central bank, your lender, and larger macroeconomic factors may impact your interest rates further.

While a high interest rate climate may deter certain home buyers from participating in the housing market, you may experience certain benefits from refinancing regardless. You can benefit from opportunities in better terms, consolidating, and cashing out, if your home’s equity has risen along with better refinancing options.


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Step 2: Benefits of refinancing

There are several benefits available to home owners during periods of high interest rates. You can get a better fixed rate mortgage if you don’t want to continue with a variable rate mortgage for your mortgage. You can also consult with your existing lender, about refinancing for better terms.


Debt consolidation

You can consolidate debt, such as credit card debt, auto loans, etc., into your refinancing option. This can lead to more favourable monthly payments, which can ultimately mean more savings for you. You can consult with the experts at sHelto who can provide you a better picture of the refinancing market in Canada.


Better mortgage terms

Additionally, if you have an older mortgage that is prior to the period of lower-rates, then it may still be beneficial for you to refinance. You can get better rates, terms, and monthly savings, if you choose to scan the Canadian market.


Increased liquidity

You’re more likely to have higher equity in your home over a longer period, even during periods of high interest rates, depending on your location in Canada. You can get cash-out refinancing options for short-term liquidity, which can help you with repairs, expansions, and investments which may further increase your home value.


Removing borrower

You may also want to refinance to remove a borrower from an agreement. This can occur due to many reasons, and refinancing may be the right way to get a better mortgage on a home that has risen in value in Canada. You can contact your exiting lender or check for better alternatives through sHelto.


Step 3: Understanding the process

The refinancing process is similar, yet less strenuous, to a normal mortgage application process. The time period can be between 30-45 days, and you would need to submit your credit score, financial documentation, debt service ratio information, etc.

There will also be additional costs associated with the refinancing, such as legal, pre-payment options, title insurance fees, appraisal fees, discharge fees, etc. There will be a home appraisal process as well to determine the value of the property, after which you may get approved based on your credit history and ability to pay off monthly payments.


Step 4: Reviewing refinancing options

There may be several refinancing options available in the market, which is why consulting with a specialist such as sHelto makes sense. You can get the right refinancing options for your specific case, while getting your details reviewed by a professional through our offering.

Canadian homebuyers can opt for fixed rate mortgages, adjustable rate mortgages, cash-out refinancing, term readjustment (generally shorter term mortgage), etc. These options are designed to help you maximize your savings, improve your credit score, and lower your overall monthly financial obligations.

After reviewing the lenders in the market, as well as the options available to you depending on your financial goals, you can initiate early discussions about refinancing. You may have to understand closing costs, fees, and other expenses associated with refinancing your mortgage, and how high interest rates climates can affect your overall financial obligations.


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Step 5: Knowing when to refinance

The right time to refinance can be just as important as finding the right lender to start the refinancing process. You need to track mortgage market interest rates for at least a few months to understand fluctuations, if you are looking at refinancing in the short-term.

Generally, the best time to refinance can be during the end of your term to avoid prepayment fees but this can change depending on your specific financial options. You can also create a trend analysis for longer term movements in the interest rates in Canada, based on different macroeconomic events, policy changes, variable rate fluctuations, etc.


Consulting with experts

sHelto can negotiate the best terms and interest rates for you on your behalf, owing to its wide expertise in refinancing in Canada. Whether you’re looking for better monthly mortgage payments or seeking a cash out refinance solution for a mortgage loan, sHelto can work with you.


Using refinancing tools

You can use the calculator tools available via sHelto on our platform to check for potential savings, costs, monthly mortgage payment changes, home equity loan solutions, etc. Our mortgage refinance calculator can help you determine the best time to refinance.


Capturing all expenses

If you are consolidating your debt or are considering cash-out refinancing, then you need to capture all your expenses. This will tell you the best time to refinance your mortgage during periods of high interest rates.


Knowing potential savings

When looking at mortgage interest rates refinance options, you can also check for potential fees associated with refinancing. You can add in your break-even points, and then reach out to mortgage refinance lenders for different available options.


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Step 6: Avoiding pitfalls

You can avoid the critical pitfalls, such as not reinvesting cashflow, going for higher variable rates, extracting maximum home equity at near 80%, etc. by mapping the pathway. You can use the best tools available through sHelto, as well as consult with us thoroughly to avoid unnecessary complexities.


Always consult with a professional

If you’re looking at mortgage lenders or are seeking to remove your private mortgage insurance, then you need to ensure that refinancing is the right option for you. You can consult with a professional about your mortgage goals for the best solution even if HELOC or other solutions are more viable.


Plan your investment

You can save money when you opt for refinancing even during high interest rate periods, but you need to invest the amount into improving your equity. Canadian homeowners should not change their mortgages to gain cashflows for frivolous expenses.


Focus on consolidation

A lack of debt consolidation can lead to higher monthly pay-outs and greater financial obligations. You can focus on refinancing during high interest rate periods to consolidate debt and lower your monthly expenses.


Enhance home value

A critical pitfall that homeowners can fall into is to not enhance their home value after refinancing. Whether you are changing your home mortgage terms or monthly payments, you should always focus on enhancing your property value long-term.



Even during periods of high interest rates, there are important benefits to refinancing. There may be several offers available in Canada, allowing you to adjust your terms, amount, equity, and other factors. The right approach to refinancing is to assess your individual situation, in terms of your agreement, and understand what fits best to your evolving needs.

Changing terms, consolidating debt, and cashing out may be viable options if you require additional liquidity or see a better option in the market. The best approach is to work with the experts at sHelto to help you guide your way through the mortgage refinancing market in Canada.

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