Is my refinance quote good? What to check (Ontario)

What a refinance quote should show

A refinance replaces your mortgage with a larger one, or changes its terms mid-way. A complete quote, in writing, generally shows:

• the new mortgage amount and the home value it is based on;
• the penalty to break your current term, or confirmation that there is none because your term is ending;
• the term, the amortization, the payment and the penalty method on the new mortgage;
• any HELOC (home equity line of credit) portion and its limit;
• every fee and closing cost, and who pays each one.

If any of these items is missing, ask for the missing item before you compare.

The new amount and the 80% ceiling

Federally regulated lenders cap an uninsured mortgage at 80% of the home's value (source: OSFI, checked October 2026). This cap is the ceiling for most refinances, and the cap covers the mortgage and any HELOC together.

Illustrative, not a quote: on a home valued at $800,000, 80% is $640,000 ($800,000 × 0.80). If you owe $450,000, the most you could add is about $190,000 ($640,000 − $450,000), before costs, subject to lender approval and qualifying.

If the lender's appraisal comes in lower than your estimate, the ceiling drops with the appraisal. The refinance equity tool runs the ceiling arithmetic for your own numbers.

The penalty to break your current term

If your term has not ended, refinancing means breaking the term. On a fixed mortgage, the penalty is usually the higher of three months' interest or the interest rate differential (IRD). The IRD compares your rate with the lender's current rate for the time left. Lenders may use posted rates, and your contract governs (source: Financial Consumer Agency of Canada, checked October 2026).

On a variable mortgage, the penalty is commonly three months' interest. The penalty estimator gives a rough figure.

Some lenders offer a blend-and-extend instead. A blend-and-extend generally combines your current rate with today's rate for the new money and extends the term, so there is no full penalty. Whether the blend costs less depends on the blended rate and the new term. Ask for the blend and a refinance that pays the penalty, side by side.

A refinance means qualifying again

A refinance is a new mortgage, so the stress test applies. You qualify at the greater of your contract rate plus 2 percentage points or OSFI's minimum qualifying rate (source: OSFI, checked October 2026). The same test applies when you refinance or add a HELOC (source: Department of Finance and Financial Consumer Agency of Canada, checked October 2026).

The exemption for a straight switch at renewal does not cover a refinance. The straight-switch exemption applies only when you do not increase the amount or the amortization.

If part of the refinance is a HELOC

A HELOC can be combined with a mortgage. The revolving part (the line you draw on and repay) can be no more than 65% of the home's value, and the HELOC and mortgage together no more than 80% (source: OSFI and Financial Consumer Agency of Canada, checked October 2026). Anything above 65% has to be an amortizing mortgage.

On the illustrative $800,000 home, the line could be up to $520,000 and the total up to $640,000. HELOC rates are usually variable, and many lenders can review or reduce the limit.

Legal, appraisal and discharge costs

A refinance commonly needs a lawyer to register the new mortgage, an appraisal, and sometimes a discharge fee from the old lender. Some lenders cover part of these costs. Ask for each cost in writing and whether each cost is paid upfront or added to the mortgage. A real-estate lawyer can tell you what their part will cost.

The total cost of the refinance against what you have now

Compare the refinance with keeping the mortgage and the debts you have. Illustrative, not a quote:

1. Today: $2,600 a month on the mortgage and $900 on a car loan and two credit cards, $3,500 in all.
2. The quote: one payment of $3,100 a month, so $400 a month less.
3. The cost of getting there: a $7,500 penalty plus about $2,000 of legal, appraisal and discharge costs, $9,500 in all.
4. Break-even: $9,500 ÷ $400 = about 24 months. If your term ends in 18 months, waiting and refinancing then may cost less.

Part of that lower payment comes from spreading the car loan and card balances over the full amortization, so you pay interest on them for longer. Consolidating helps most when you keep paying that debt down at about the old pace and the cards stay at zero.

Ask the lender for the total interest you would pay over the term on the new mortgage.

When not to refinance

Refinancing generally does not make sense when:

• the penalty and costs are larger than what you would save;
• your term ends soon;
• the refinance only stretches short-term debt over decades, with no plan to repay the debt;
• the larger payment would strain your budget.

Keeping your mortgage and using your prepayment privileges is a real answer. More cases are in when refinancing does not make sense.

Sources

• OSFI — Treatment of real estate secured lending products under Guideline B-20, checked 2026-10-23.
• OSFI — Minimum qualifying rate for uninsured mortgages, page modified 2026-01-29, checked 2026-10-23.
• Financial Consumer Agency of Canada — Borrowing against home equity, checked 2026-10-23.
• Financial Consumer Agency of Canada — Preparing to get a mortgage, checked 2026-10-23.
• Financial Consumer Agency of Canada — Reduce prepayment penalties, checked 2026-10-26.

What to do next

Enter your quote in the offer check, then send us the numbers. A person compares your quote with what the lenders we work with would offer and replies within one business day. If keeping your current mortgage is the better deal, we say so.