Refinancing toward financial freedom and security

May 9, 2025

Sara Maginn Pacella

Managing debt is an integral part of regular financial planning. Connected to this is a regular review of bills, loans and debts and exploring refinancing options. Refinancing a loan can lower your monthly payments and reduce your interest payments, freeing up more money in your budget.
Regular review of your overall budget and debts will allow you to explore strategies to help you pay down your debt faster.

HCM Podcast

Produced with Google Notebook LM Using AI Narration

How can I manage my auto loan refinancing?

Auto loan refinancing is when you take out a new loan that will allow you to repay your existing loan, whether you have a new or used vehicle. The time to do this is when you can secure a loan that has a better interest rate to lower your regular payments, putting more cash back into your budget. People can qualify for better loans when interest rates reduce if they have managed to improve their credit score since they took out the initial loan, or when their current loan term is ending. You can secure auto loan refinancing at a car dealership, bank or with accredited online lenders.

To qualify for an auto loan, lenders will assess your credit rating, income and equity and ensure that your current lending account remains in good standing. When refinancing a car loan, be sure to research any fees associated with processing the loan, prepayment penalties and closing costs to ensure that refinancing makes financial sense within your budget.

What can I do about student loan refinancing?

People who are having trouble paying back their student loans can seek assistance and should do so promptly, as missing payments will impact their overall credit score. Who to contact to get repayment assistance, obtain student loan refinancing and reduce your monthly payments will depend on which province your loan originates from. The best bet is to contact the National Student Loans Service Centre (NSLSC) to find out your options. Those who miss nine months worth of payments will see the federal portion of their loan sent to the Canadian Revenue Agency to be collected so ensure you have made arrangements for repayment before falling behind.

” Managing debt is an integral part of regular financial planning. ”

Is mortgage refinancing the best tool for my financial plan?

Kathryn Kotris is a senior mortgage broker at Mortgage Architects and has decades of industry experience. She told HCM Dialogue that she recommends people explore mortgage rates with their current lender and a mortgage broker to secure the best mortgage refinance rates. She elaborates that lenders want to keep their clients, and, as an existing client, you have the advantage of negotiating so they can retain their book of business.

Refinancing provides an opportunity to consolidate other debts (including car, student and credit card debts) at a lower rate because your home secures your mortgage and lowers the risk to your lender. This allows you to reduce your overall cost of living and lower your monthly payment because of a lengthened amortization. Kotris recommends getting a referral to a mortgage broker, as, “Many mortgage brokers come from a banking background and not just a sales background, so we understand all of the banks, rates, products and terms and can look for the best product to suit a client’s unique needs.”

Kotris also suggests that those potentially facing financial hardship can benefit from refinancing to help them bridge the gap through their temporary financial crisis, noting that when the economic hardship is over, they can then opt to make extra payments toward the principal and pay off their mortgage faster.

Debunking attitudes about mortgage consolidation loans

Kotris says that previous generations were reluctant to consolidate their debts into their homes, as there was a stigma associated with doing so. People saw mortgage consolidation loans as a failure or lifetime burden, when in fact there are many benefits of refinancing a home loan. Kotris says, “Refinancing is an excellent tool when used mindfully and strategically. It should not be used to purchase things you don’t need. Important financial decisions should not be driven by FOMO or emotion, and people should refrain from using their home like an ATM. However, they should not be afraid to consolidate debt when necessary.” She also notes that mortgage brokers can help clients develop a long-term plan that includes repayment options.

What about cash-out refinancing?

Kotris says that some people will rely on a Home Equity Line of Credit (HELOC) added on to their mortgage as part of retirement planning, debt consolidation, renovations and other investments. This type of refinancing allows qualified borrowers to have a credit facility of up to 80 per cent of their home’s value. Kotris observes that, in terms of investment opportunities, it is a good option for people who are interested in getting a tax write-off on the interest for Canadian investments.

Final words of wisdom

Because of Kotris’ years of experience working in mortgages, she has seen many different financial markets and recessions, and she helps her clients focus on the big picture. Kotris advises “To be mindful of falling into a false sense of security that your home will always increase in value because that is what the market has done in recent years.” She cautions people not to count on a future increase in housing value to support today’s spending habits and remember that a home is a primary personal sanctuary.

When considering all your refinancing options, speak to professionals you trust to ensure your process is stress-free and helps you reach your overall financial goals.

What are your thoughts on