A cash-out refinance is when you replace your existing mortgage with a new, larger mortgage and receive the difference in cash. This allows you to tap into the equity you’ve built up in your home without taking out a second mortgage.
💡 How It Works (Ontario Example)
- Your home is worth: $900,000
- Your current mortgage: $450,000
- You refinance up to 80% of your home’s value = $720,000
- You receive: $270,000 cash ($720K – $450K new loan pays off old mortgage)
You now have a new $720,000 mortgage, and access to $270,000 in tax-free funds.
✅ When to Use a Cash-Out Refinance
- Home renovations
- Consolidating high-interest debt
- Funding large expenses (education, legal costs, investment property, divorce settlement)
- Paying off tax or mortgage arrears (to stop a power of sale)
📌 Eligibility Requirements (Ontario)
- Sufficient home equity (max 80% loan-to-value ratio)
- Good credit score (usually 620+ for A-lenders)
- Verifiable income (employment, self-employed, or pension)
- Stable property value (verified by an appraisal)
- Reasonable debt-to-income ratio
If you don’t qualify at the bank or would like easily explore multiple options, a mortgage broker can help you apply with B-lenders or private lenders.
🔍 Pros
- Access large amounts of cash
- Lower interest rate than unsecured loans or credit cards
- Simplifies monthly payments if used for debt consolidation
- Can improve cash flow or support life goals
⚠️ Cons
- Restarting your mortgage term (can cost more long-term)
- May involve penalties for breaking your current mortgage early
- Legal fees, appraisal, and possibly lender fees apply
- Increases your debt and monthly payments
📄 What You’ll Need to Apply
- Government-issued ID
- Recent mortgage statement
- Property tax bill
- Income verification (pay stubs, T1s, NOAs)
- List of debts to consolidate (if applicable)
- Property appraisal (ordered by the lender)
To get connected to a local mortgage broker fill in the form below.
