Refinancing replaces your current mortgage with a new one, usually to access equity, consolidate debt or change the terms. Here is how it works, what it costs, and when it makes sense.
Home values across the GTA have built equity for many owners that sits untouched. A refinance lets you borrow against it, replacing your existing mortgage with a larger one and taking the difference in cash, or restructuring the mortgage on better terms. It is a powerful tool and, like any tool, it has costs. Both belong on the table.
You pay out your current mortgage and take a new one, with a new amount, rate, term and amortization. Lenders will generally refinance up to 80% of your home's appraised value. The gap between that ceiling and what you owe today is the equity you can access.
A home equity line of credit sits alongside your mortgage and lets you draw and repay as needed, usually at a variable rate. A refinance gives you a lump sum at a fixed or variable mortgage rate. If you need a set amount once, a refinance is often cheaper. If you need flexible access over time, a HELOC may fit better. We will show you both.
Refinancing before your term ends triggers a prepayment penalty on the old mortgage: typically three months' interest on a variable mortgage, and the greater of three months' interest or the interest rate differential on a fixed one. Add an appraisal and legal fees. Whether the refinance makes sense depends on whether the savings or the use of funds outweigh those costs, and we will put the numbers side by side before you decide. Refinancing at maturity avoids the penalty entirely, which is why timing it with your renewal can be the smartest route.
A refinance is a new application: income, credit and an appraisal of the property. Refinances are uninsured and priced a little higher than insured purchases, and the amount you can borrow is capped at 80% of value. Self-employed owners with strong equity are often well served here, because the equity does a lot of the work.
Canadian Mortgage Group Corp is a mortgage brokerage licensed by the Financial Services Regulatory Authority of Ontario, Brokerage #11392. This page is general information, not financial advice or an offer of credit. Mortgage products, rates and approval are subject to lender criteria and change without notice (O.A.C.).
Generally up to 80% of your home's appraised value, less the balance of your current mortgage. An appraisal sets the value.
On a variable mortgage, typically three months' interest. On a fixed mortgage, the greater of three months' interest or the interest rate differential, which can be larger. We calculate it before you decide. Refinancing at maturity avoids it.
No. A refinance replaces your existing mortgage with a new, larger one. A second mortgage is an additional loan behind the first, usually at a higher rate. In some situations a second mortgage is the better tool, and we will say so.
Yes, and it is one of the most common reasons. The mortgage rate is far lower than card rates, so monthly payments usually fall. The discipline is not running the cards back up afterwards.
Almost always. The lender needs a current value to set the 80% ceiling. The cost is modest and some lenders cover it.
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