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Refinancing replaces your existing mortgage with a larger one and hands you the difference. It is the cheapest way to borrow a large sum against a home you own — and, done for the wrong reason, the one most likely to leave you in the same position three years later with a bigger balance.
Stephen Green, Mortgage BrokerWaterloo Region · serving all of Ontario
Nearly 30 years in Canadian financial services
General information about refinancing in Ontario. Everything is subject to full qualification, lender approval and final terms.
Not a top-up and not a second loan. The existing mortgage is paid out and replaced with a larger one, and the difference comes to you.
Refinancing at the end of your term avoids a breakage penalty entirely, which is why the two conversations usually happen together.
Mid-term is still often worth it — but only once the penalty is on the table as a number rather than a surprise. Work that out first.
The common one. Unsecured debt carried at credit-card pricing, folded into a mortgage secured on the house. It lowers the monthly cost. It also turns short-term debt into 25-year debt and puts your home behind it — which is the part that deserves a proper conversation.
Works well when the money is going into the property. If you are buying a place in order to fix it, Purchase Plus Improvements is usually the better structure — the money comes at purchase rather than after.
Using equity in one home to buy the next, or an investment. The qualification is different once a second property is involved, and so is the tax treatment of the interest.
Buying out a former partner’s share. There is a specific programme for this that allows more than the usual 80% in some circumstances, and it is worth asking about rather than assuming.
Three ways to reach the equity in your home, and they suit different problems.
| Refinance | HELOC | Second mortgage | |
|---|---|---|---|
| What it is | Replaces your mortgage with a bigger one. | A revolving line secured on the house. | An additional loan behind the first. |
| Break your mortgage? | Yes, if mid-term — so a penalty applies. | No. | No. |
| Cost of borrowing | Lowest of the three. | Higher, and it moves. | Highest, sometimes considerably. |
| Best for | A single large sum you know the size of. | Money you will draw in stages, or may not use. | A short-term need, or a file that will not qualify elsewhere. |
Separate from what you are borrowing. Most can be added to the mortgage rather than paid up front, which is worth asking about.
Only if you break mid-term, and on a fixed mortgage it can be much larger than three months’ interest. Get the figure in writing from your lender before deciding anything.
Typically $300–$500. The lender orders it; you usually pay for it, and it sets the ceiling on everything else.
A refinance registers a new mortgage on title, so a solicitor is involved. Commonly $1,000–$2,000, sometimes covered on a straight switch.
A few hundred dollars to remove the old mortgage from title. Small, and routinely forgotten in the arithmetic.
Illustrative ranges for Ontario, not quotes. Your solicitor, your lender and the property determine the actual figures, and everything is subject to qualification and final lender terms.
Up to 80% of what the property appraises at, less what you still owe. Default insurance is not available on a refinance in Canada, which is why that ceiling is firm rather than negotiable.
Only if you do it mid-term, and then a penalty applies. Refinancing at renewal avoids it entirely, which is why the two conversations usually happen together. Mid-term can still be worth it once the penalty is a number rather than a surprise.
An appraisal, typically $300 to $500. Legal work to register the new mortgage, commonly $1,000 to $2,000. A discharge fee of a few hundred to remove the old one. Plus the penalty if you are breaking mid-term. Most can usually be added to the mortgage rather than paid up front.
It depends on the shape of the need. A refinance suits a single large sum you know the size of and borrows at the lowest cost of the three options. A HELOC suits money drawn in stages or that you may not use at all. A second mortgage suits a short-term need or a file that will not qualify elsewhere.
Yes. It is a full application, so the stress test applies and your income, credit and the property are all assessed again. This is the main practical difference from a straight renewal, which does not work that way.
Yes, and there is a specific programme for exactly this that can allow more than the usual 80% in some circumstances. It is worth asking about rather than assuming the standard limit applies.
The monthly cost almost always falls, because mortgage borrowing is cheaper than credit-card borrowing. What changes alongside it is that short-term debt becomes long-term debt secured on your home. Whether you come out ahead depends entirely on what happens to the spending that created the balance.
Bring what you know about your balance, your term and what you are trying to pay for. We will work out the ceiling, what breaking would cost, and whether something other than a refinance fits better.