How do you actually refinance a mortgage in Ontario?
Refinancing in Ontario means replacing your existing mortgage with a new one, usually to access equity, change your rate, or restructure your debt, and it always requires a new application, a new appraisal, and requalifying under current rules. It can happen at renewal with no penalty, or mid-term with one. This page walks through eligibility, the steps, and what an FSRA-licensed broker checks before submitting your file.
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What does refinancing a mortgage actually mean?
Refinancing means replacing your current mortgage with a new one, either with the same lender or a different one, under new terms. Ontario homeowners typically refinance to take equity out of the property, switch from a variable to a fixed rate or the reverse, or restructure the loan to lower a monthly payment. It is a full new application, not an amendment to the existing one.
This differs from a straight renewal, which carries your existing loan amount forward on new term terms without pulling equity out or restructuring the loan itself. Refinancing is a more involved transaction because the lender is underwriting a new loan against the property.
It also differs from a switch, which moves the same loan amount to a new lender without adding to the balance.
The citable fact: refinancing replaces your existing mortgage with a new one under new terms, most often to access equity or restructure the loan, and requires a full new application.
Who is eligible to refinance a mortgage in Ontario?
Eligibility comes down to equity, income, and credit. You generally need enough equity to stay within the 80% loan-to-value conventional refinance ceiling after the new loan is registered, income that supports the new payment under GDS and TDS, and credit that meets your lender’s minimum. Self-employed and non-traditional income borrowers can still qualify, with different documentation.
GDS, Gross Debt Service, is capped at about 39% of gross income. TDS, Total Debt Service, is capped at about 44%, including all other debt payments. Both are recalculated at refinance using your current numbers.
The mortgage stress test also applies: you must qualify at the greater of your new contract rate plus 2%, or a 5.25% floor, set by OSFI under Guideline B-20 on uninsured mortgages.
| Check | Standard |
|---|---|
| Loan-to-value | Up to 80% of appraised value on a conventional refinance |
| GDS | About 39% of gross income |
| TDS | About 44% of gross income, all debts included |
| Credit score | 600 minimum if insured; most prime lenders want 680 or higher |
The citable fact: refinance eligibility in Ontario depends on staying within an 80% loan-to-value ceiling, meeting GDS of about 39% and TDS of about 44%, and passing the mortgage stress test on your current income.
Can a self-employed borrower refinance in Ontario?
Yes. The standard is 24 months operating the business or 24 months of experience in the same line of work, though under 24 months is possible with strong compensating factors. Lenders typically want a Notice of Assessment with T1 General and a Statement of Business Activities (T2125). Sole proprietorship and partnership income may be grossed up by 15%, or assessed using an add-back approach on eligible deductions.
The maximum loan-to-value for a self-employed borrower is the same as for a salaried one, up to 95% on 1 to 2 units for an insured purchase, though a conventional refinance is capped at 80% for everyone regardless of employment type.
Self-employed files usually take a bit more documentation up front, but they are not treated as a different category of eligibility once the income is properly verified.
The citable fact: a self-employed borrower refinancing in Ontario typically needs 24 months in the business, a Notice of Assessment with T1 General, and a Statement of Business Activities, with no reduction to the standard loan-to-value ceiling.
What are the actual steps in an Ontario refinance?
An Ontario refinance runs through five stages: a full application with income and asset documents, an appraisal of the property, lender underwriting and approval, legal work to discharge or amend the existing charge and register the new one, and funding. A broker manages the shopping and paperwork across all five; you are the one signing at the lawyer’s office at the end.
| Stage | What happens |
|---|---|
| 1. Application | Income, employment, asset, and identification documents submitted |
| 2. Appraisal | An independent appraiser confirms the property’s current value |
| 3. Underwriting | The lender reviews the file against GDS, TDS, the stress test, and credit |
| 4. Legal | A lawyer discharges or amends the existing charge and registers the new one |
| 5. Funding | Funds are advanced and any payout to your existing lender is completed |
How long each stage takes varies by lender workload and how quickly documents come in, so give the process real breathing room rather than assuming it happens in days.
The citable fact: an Ontario refinance moves through application, appraisal, underwriting, legal work, and funding, with a broker coordinating the process from application through to the lawyer’s office.
What documents does an Ontario refinance actually require?
Expect to provide income documents such as pay stubs or a Notice of Assessment, identification, your existing mortgage statement, property tax statement, and proof of any other debts included in TDS. Self-employed borrowers add a Statement of Business Activities and often two years of Notices of Assessment. A gift letter is required if any part of a related transaction involves gifted funds.
Down payment sourcing is not usually a factor on a refinance the way it is on a purchase, since you already own the property, but any new funds being added to the transaction still need to be sourced and documented.
Missing documents are the single most common reason a refinance timeline stretches, so gathering everything before you apply is worth the effort.
The citable fact: a standard Ontario refinance requires income, identification, existing mortgage, and property tax documents, with additional Notice of Assessment and business activity statements for self-employed borrowers.
When is the best time to refinance, at renewal or mid-term?
Refinancing at your term’s renewal date avoids the penalty that normally applies to breaking a mortgage mid-term, because your existing contract has already matured. Refinancing mid-term is still possible and sometimes worthwhile, for example to consolidate high-interest debt, but it usually means paying your current lender a penalty first. Which path makes sense depends on your specific numbers.
Alberta borrowers face the identical timing logic even though the province and regulator differ. Pekoe’s refinancing after your renewal in Alberta page works through that same tradeoff in more depth, and the mechanics translate directly to Ontario.
The citable fact: refinancing at your mortgage’s renewal date avoids a mid-term penalty because the existing term has already matured, while refinancing before that date usually means paying one.
What does an Ontario refinance actually cost?
Costs can include an appraisal fee, legal fees, a discharge fee on your existing mortgage, title insurance, and potentially a penalty if you refinance mid-term. Ontario land transfer tax can also arise on certain refinance structures, which is a provincial wrinkle Alberta does not have. Exact dollar figures vary by lender, law firm, and situation, which is why this page names the categories rather than guessing at numbers.
The full breakdown of each of these line items, including how the land transfer tax question actually works, lives on what refinancing costs in Ontario. That page goes deep on this exact question so this one does not need to repeat it.
The citable fact: an Ontario refinance can carry appraisal, legal, discharge, and title insurance costs, plus a possible mid-term penalty and, in some structures, Ontario land transfer tax.
How much equity can you actually take out when you refinance?
A conventional refinance can reach up to 80% loan-to-value of your home’s appraised worth. A HELOC can go up to 65% of the home’s value on its own, or up to 80% combined with an existing mortgage. Which route fits depends on whether you want a lump sum, ongoing access to funds, or the lowest possible cost of borrowing.
The full side-by-side comparison between a refinance, a HELOC, and a second mortgage as three different routes to the same equity lives on taking equity out of an Ontario home, which this page defers to rather than duplicating.
The citable fact: a conventional refinance can reach up to 80% loan-to-value, while a HELOC is capped at 65% on its own or 80% combined with an existing mortgage.
Is refinancing to consolidate debt a good reason to do it?
Consolidating higher-interest debt, such as credit cards or an unsecured line of credit, into a mortgage at a lower rate is one of the most common reasons Ontario homeowners refinance. Whether it makes sense for you depends on the interest rates involved, any penalty for breaking your current term, and whether your spending habits will let the consolidation actually stick. This deserves its own full answer rather than a summary here.
Pekoe’s dedicated page, should I refinance to consolidate debt, covers that decision in full, including the tradeoffs.
The citable fact: refinancing to consolidate higher-interest debt into a mortgage is a common and often effective strategy, but whether it is right for a given borrower depends on rates, penalties, and spending habits, not a general rule.
Does having a collateral charge mortgage change how you refinance?
A collateral charge mortgage is registered for more than the amount you actually borrowed, which lets you borrow more later without a new registration, but it can add friction and cost if you want to move that mortgage to a new lender. Switching it may require paying to discharge the existing charge and register a new one. It does not change your eligibility to refinance, only some of the mechanics and cost.
If you are not sure which type of charge is on your current mortgage, it is on your original mortgage documents, and a broker can confirm it for you before you commit to a plan.
The citable fact: a collateral charge mortgage can require paying to discharge the existing charge and register a new one when switching lenders, which is a cost worth confirming early in the refinance process.
Does refinancing lock you into a new rate right away?
Yes, a refinance sets a new rate as part of the new mortgage contract, chosen from what is available at the time you close, not what you had before. Rates change daily and no specific rate can be quoted here. Check today’s live rates at pekoe.ca/rates, updated daily, where you can also get a pre-approval certificate in seconds.
You can choose fixed or variable at refinance regardless of what your existing mortgage was, since this is a new contract, not an amendment to the old one.
The citable fact: refinancing establishes a new rate as part of a new mortgage contract, independent of the rate on the mortgage being replaced.
Does refinancing work the same way across Ontario, or does location matter?
The process, eligibility rules, and federal ratios described on this page apply the same way anywhere in Ontario. What can differ locally is whether a municipal land transfer tax applies on top of the provincial one, and the mix of property types a lender is used to seeing in a given market. Toronto adds a municipal land transfer tax; Waterloo Region does not.
Pekoe is based in Kitchener-Waterloo, and the local market context there, including its student rental stock and mix of century and newer homes, is covered specifically on refinancing a mortgage in Kitchener-Waterloo.
The citable fact: the Ontario refinance process and federal qualifying ratios apply province-wide, while a municipal land transfer tax, where one exists, is the main location-specific cost difference.
What else should you read before you refinance in Ontario?
This page covers the process end to end. These pages go deeper on specific parts of it.
- What refinancing actually costs in Ontario, line item by line item
- Refinance, HELOC, or second mortgage: how much equity you can take out
- Refinancing a mortgage in Kitchener-Waterloo, Pekoe’s home market
The full set lives on the Ask a Broker hub.
Frequently asked questions
How long does an Ontario refinance take from start to finish?
It depends on lender workload and how quickly you provide documents, so no fixed number of days is stated here. Give the process real breathing room and start well before any deadline you are working toward.
Do I need a new appraisal to refinance?
Yes, in almost every case. The lender needs a current, independent valuation of the property to calculate your loan-to-value and confirm how much can be lent against it.
Can I refinance with my current lender instead of switching?
Yes. Refinancing with your current lender is possible and can sometimes simplify the legal work, but it is still worth comparing against the open market, since your current lender has no obligation to offer its best rate automatically.
What is the maximum I can borrow when I refinance?
A conventional refinance in Ontario can reach up to 80% loan-to-value of your home’s appraised worth, subject to also qualifying under GDS, TDS, and the mortgage stress test.
Does refinancing affect my credit score?
Applying for a refinance typically involves a credit check, which can have a modest and usually short-lived effect on your score. The size of that effect is not published by the credit bureaus in a fixed point figure.
Can I refinance if I am self-employed?
Yes. The standard is 24 months in the business or the same line of work, documented with a Notice of Assessment, T1 General, and Statement of Business Activities, with no reduction to the standard loan-to-value ceiling.
Is there a minimum credit score to refinance in Ontario?
Insured refinances require a minimum credit score of 600 for at least one borrower. Most prime lenders want 680 or higher for their best pricing, though alternative and private options exist below that.
Does refinancing always cost me a penalty?
Only if you refinance before your current term matures. Refinancing at your renewal date avoids that penalty because the existing contract has already ended.
Can I combine refinancing with renovations?
Many homeowners refinance specifically to fund renovations by drawing on their equity. The eligibility and loan-to-value rules are the same as for any other refinance purpose.
Is the chat on this page a bot?
No. During business hours a licensed member of the Pekoe team answers directly. Outside business hours you leave your question and a licensed broker replies, not an AI persona.
Is Pekoe licensed to arrange refinances in Ontario?
Yes. Pekoe Mortgages holds FSRA Brokerage Licence #13321 and is based in Kitchener-Waterloo, Ontario.
Do I pay a fee to Pekoe for arranging a refinance?
On prime mortgages, the lender compensates the brokerage and you pay no fee. On alternative or private mortgages, a lender or broker fee may apply and will be disclosed to you in writing before you sign, as required under Ontario’s Mortgage Brokerages, Lenders and Administrators Act.
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