- 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.
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Refinance vs HELOC vs second mortgage
| Option | Cost | Flexibility | Keeps current mortgage? | Best for |
|---|---|---|---|---|
| Refinance | Lowest rate; penalty mid-term | One new loan | No | Large amounts at renewal |
| HELOC | Prime + 0.5% to 1% | Draw and repay any time | Yes | Ongoing or uncertain needs |
| Home equity loan | Fixed payments | Lump sum | Yes | One-time costs |
| Second mortgage | 8%–14% + fees | Fast, short term | Yes | When 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.
- FCAC: Mortgage prepayment penalties (checked October 7, 2026)
- OSFI: Guideline B-20, residential mortgage underwriting (checked October 7, 2026)
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