Refinance your mortgage in Toronto
A refinance replaces your existing mortgage with a new, usually larger one so you can access the equity you have built. Here is what it costs, what you can borrow, and when it is the wrong move.
- Access up to 80% of your home's value — most lenders' ceiling
- Consolidate credit cards, lines of credit, CRA debt or a second mortgage
- I calculate your penalty before you commit, not after
- 30+ lenders compared, including ones that price refinances differently
- Free review, no credit check to start
Thank you
Your details are with me. I will call you within 1 business day from (647) 761-1646 — please save my number so you recognise the call.
- A 10-minute call to confirm your goals and numbers.
- I check your file against 30+ lenders and send you the realistic options.
- If it makes sense, we apply. If it doesn't, I tell you that too.
What refinancing actually means
Refinancing means breaking your current mortgage and writing a new one, almost always for a larger amount, so the difference comes back to you as cash. Most lenders will refinance up to 80% of your home's appraised value. Because you are changing the loan amount, a refinance is always stress-tested at the minimum qualifying rate, and it cannot be insured.
That last point is where most people get confused, because three different things get called "refinancing" in conversation and they are not the same:
- Renewal — your term ends, you sign a new one with the same lender for the same balance. No new approval needed. See mortgage renewals.
- Switch or transfer — you move the same balance and the same remaining amortization to a new lender at renewal. No new money. This is a straight switch, and it is usually not stress-tested.
- Refinance — you break the mortgage and rewrite it, normally to take equity out or to change the amortization. Stress-tested, uninsured, capped around 80% of value.
The distinction matters in dollars. A switch and a refinance can look similar on a lender's rate sheet and cost thousands of dollars apart once penalties, legal fees and qualification are counted. If what you actually need is a better rate on the same balance, you want a switch, not a refinance — and a lot of people are quietly sold the more expensive one. My switch vs refinance guide works through which is cheaper in which situation.
How much can you actually take out?
Take 80% of your home's appraised value and subtract what you still owe. What is left is roughly your available equity, before costs.
Appraised value $1,000,000
80% of value → $800,000 (the new mortgage ceiling)
Existing mortgage balance → $500,000
Available equity ≈ $300,000, less your penalty and closing costs
Two things move that number in practice. The appraisal is the lender's opinion of value, not your estimate or a listing site's — and on a refinance the lender almost always orders one. And your income still has to carry the larger payment under the stress test, which is the greater of your contract rate plus 2% or 5.25%. Plenty of Toronto homeowners have the equity but not the qualifying income, which is the single most common reason a refinance stalls.
If you are short on either, there are other routes — a HELOC behind your existing mortgage, a second mortgage, or a lender whose income rules fit your situation better. Those are not automatically worse. They are just different trade-offs, and worth pricing side by side.
When a refinance is the right call
These are the situations where the arithmetic usually works. Each one is worth running properly before you commit.
Consolidating high-interest debt
Credit cards and unsecured lines of credit carry rates several times a mortgage rate. Rolling them into the mortgage usually drops the total monthly obligation substantially. The catch is real and worth saying out loud: you are converting short-term debt into debt secured by your home and stretched over decades. More on debt consolidation.
Funding a renovation
Refinancing is usually cheaper than a construction loan or unsecured borrowing for a kitchen, a basement or an addition. If you are adding a self-contained suite specifically, look at the CMHC secondary-suite program first — it goes to 90% of the as-improved value, well past the normal 80% ceiling.
Paying CRA tax debt
CRA debt accrues interest, is not negotiable the way other creditors are, and can result in a lien on your property. Most A-lenders will not refinance to clear it; several alternative lenders will, and will treat a payoff letter as the path to clean title.
Removing or adding someone from title
A separation, a divorce, buying out a co-owner, or adding a spouse all require the mortgage to be rewritten, not just the title changed. The qualification is done on whoever remains.
Buying an investment property
Pulling a down payment out of your existing home is frequently cheaper than any other source of funds for a rental purchase. See investment property mortgages.
Escaping an expensive second mortgage
If you took a private or second mortgage to get through a rough patch, refinancing both into one first mortgage once your credit and income have recovered is usually a large monthly saving. This is one of the most worthwhile refinances there is.
What it costs — and the number nobody quotes you
Breaking a mortgage mid-term triggers a prepayment penalty. It is usually the higher of three months' interest on your balance, or the interest rate differential (IRD). On a fixed mortgage with time left in the term, the IRD is normally the larger of the two, and it can be dramatically larger.
The Financial Consumer Agency of Canada publishes a worked example that shows the gap: a $200,000 balance at 6% with 36 months remaining in a five-year term, where the current three-year posted rate is 4%. Three months' interest comes to roughly $3,000. The IRD comes to roughly $12,000. The lender charges the higher one.
Here is the part that matters and that you will not hear from a branch: how your lender calculates the IRD changes the answer by thousands. Big banks generally compute it against their posted rates, which are higher than what anyone actually pays, and that inflates the differential. Many monoline lenders compute it against the contract rate. Two mortgages with the same balance, same rate and same time remaining can produce wildly different penalties purely because of the method buried in the contract.
So the first thing I do on any refinance is get your actual payout figure from your lender in writing, then test whether the saving survives it. Sometimes it does not, and the right advice is to wait for renewal. I would rather tell you that than earn a commission on a refinance that costs you money. The penalty guide walks through both calculations in detail.
Beyond the penalty, budget for legal fees, an appraisal, a discharge fee from the outgoing lender, and title insurance. Some lenders cover some of these on a refinance; it is worth asking before you choose one. If you took cashback when you signed, expect a clawback.
Refinance, HELOC, or second mortgage?
Accessing equity does not have to mean breaking your mortgage. Which of these is cheapest depends almost entirely on your penalty and how much of the money you need at once.
| Refinance | HELOC | Second mortgage | |
|---|---|---|---|
| What happens to your current mortgage | Broken and replaced | Stays exactly as it is | Stays exactly as it is |
| Prepayment penalty | Yes — usually the main cost | None | None |
| Typical maximum | 80% of value, all in | Commonly up to 65% of value on the revolving portion, within an 80% combined limit | Varies widely by lender and situation |
| Stress-tested | Yes, always, at the qualifying rate | Yes | Depends on the lender |
| Rate | Lowest of the three, as a first mortgage | Higher than a mortgage, and variable | Highest of the three |
| Best when | You need a large lump sum and your penalty is small or you are near renewal | You need flexible access over time, or your penalty is large | You need funds now, cannot qualify elsewhere, and intend to refinance out of it later |
Figures describe common lender practice, not regulation, and vary by lender and by file. Nothing here is an offer of credit.
How a refinance runs with me
Most refinances complete in two to four weeks once the paperwork is in. The appraisal and the lawyer usually set the pace.
- A 15-minute callYour balance, your rate, your lender, your term end date, and what you actually want the money for. That is enough for me to tell you whether this is worth pursuing.
- I get your real payout figureNot an estimate. The actual penalty and discharge amount from your lender, in writing, so the decision is made on real numbers.
- We price it against 30+ lendersIncluding the ones that treat refinances, rental income and self-employed income differently from the bank you are with now.
- You see the comparison, including "do nothing"Side by side: refinance, HELOC, or wait for renewal, with the total cost of each over your remaining term. If waiting wins, I will say so.
- Application and appraisalI package the file so the underwriter gets what they need the first time. The appraisal is ordered here.
- Lawyer and fundingYour lawyer registers the new mortgage, pays out the old one and any debts we are consolidating, and the balance comes to you.
Honest answers
Can I refinance during my term or do I have to wait until renewal?
How much equity do I need to refinance in Ontario?
Is a refinance stress-tested?
Can I refinance to pay off credit card debt?
Will refinancing hurt my credit score?
Do I need an appraisal to refinance?
Can I refinance with bruised credit or after a missed payment?
What does it cost to refinance a mortgage in Ontario?
Related
Find out what your refinance would really cost
I will get your actual penalty figure from your lender and show you whether a refinance beats waiting. If it does not, I will tell you that.
Aleksey Tsoy · Mortgage Agent (Level 1) · Licence #M20001520 · Centum Financial Services LP · Brokerage Licence #13054