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Mortgage refinance: compare lender bids

A mortgage refinance replaces your current mortgage with a new one to lower the rate, take out equity or consolidate debt. In Canada you can usually refinance up to 80% of your home's value. Verified lenders bid on your refinance, and you see the penalty and costs before you choose.

Updated October 7, 2026

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Key takeaways
  • Refinancing is capped at 80% of your home's value (65% for a HELOC portion).
  • Mid-term, expect a penalty: 3 months' interest or the interest rate differential (IRD).
  • A refinance requires full requalification, including the stress test.
  • Compare with a HELOC, home equity loan or second mortgage before you break your mortgage.

How much can I refinance my home for?

Up to 80% of the appraised value, minus what you owe. On a $900,000 home with $420,000 owing, the most you could refinance to is $720,000, freeing about $300,000 before costs.

What does it cost to break my mortgage?

Variable mortgages usually charge three months' interest. Fixed mortgages charge the greater of three months' interest and the IRD, which can be much higher when rates have fallen.

Example: $400,000 at 4.89%, 2 years left, lender's 2-year rate 3.99% IRD = 0.90% × $400,000 × 2 = $7,200 3 months' interest = $400,000 × 4.89% ÷ 4 = $4,890 Penalty = $7,200 (the greater)

Refinance vs HELOC vs second mortgage

Ways to borrow against your home
OptionCostFlexibilityKeeps current mortgage?Best for
RefinanceLowest rate; penalty mid-termOne new loanNoLarge amounts at renewal
HELOCPrime + 0.5% to 1%Draw and repay any timeYesOngoing or uncertain needs
Home equity loanFixed paymentsLump sumYesOne-time costs
Second mortgage8%–14% + feesFast, short termYesWhen breaking costs too much

Blend and extend vs refinance

Some lenders offer to blend your current rate with today's rate instead of charging a penalty when you add money. Ask for the blended rate in writing and compare it with refinance bids; the blend isn't always cheaper.

Frequently asked questions

Is cash-out refinancing available in Canada?

Yes, up to 80% loan-to-value with a prime lender. Private lenders may go higher at a higher cost.

How long does a refinance take?

Usually two to four weeks, including appraisal and legal.

Should I refinance to consolidate debt?

If high-interest debt is costing more than the refinance costs, it often pays. See debt consolidation mortgage.

MBWritten by the MortgageBids.ca editorial team. Last updated October 7, 2026. General information only; your lender confirms terms for your file.
Sources
  1. FCAC: Mortgage prepayment penalties (checked October 7, 2026)
  2. OSFI: Guideline B-20, residential mortgage underwriting (checked October 7, 2026)

Related

Refinance calculatorPenalty calculatorHELOC

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