Mortgage Refinancing in Quebec

Refinancing is a swap, not a top-up. Your current mortgage is discharged and a new mortgage is registered, with terms you choose at that point. Because the paperwork is fresh, this is also the moment when you can increase the loan amount and take the difference in cash.

What refinancing actually changes

You are replacing your existing mortgage with a new one, so the rate, term and payment schedule are all set again. If you refinance with a larger balance than you currently owe, the extra is paid to you and the charge on title is updated to match. Some people consolidate other debts into that larger mortgage. Note that a refinancing equity line of credit is a different product with its own terms; a refinance replaces a mortgage, while an equity line is a separate borrowing facility.

Reasons people refinance

• To move from a variable rate to a fixed one, or the reverse.
• To access equity for a renovation, tuition or a large purchase.
• To combine higher-interest debts into one mortgage payment.
• To change the amortization and adjust the monthly payment.

What the lender reviews

Refinancing is underwritten much like a new mortgage. Federally regulated lenders generally work to a total debt service ratio ceiling of about 44% and apply a qualifying stress-test rate above the contract rate under OSFI Guideline B-20. Canadian fixed-rate mortgages are compounded semi-annually by law, which affects how quoted rates translate into real cost. The Financial Consumer Agency of Canada covers the qualification basics.

Costs, penalties and timing

Breaking a mortgage term early usually triggers a prepayment charge, and for a fixed rate it is often the greater of three months' interest or an interest rate differential calculation. Add appraisal, legal, discharge and registration fees. If you are close to renewal, waiting can be far cheaper, so check your penalty quote before you move.

Refinancing your largest debt is a significant decision, and one worth reviewing with a licensed professional. LoanGoose is a loan matching and comparison service, not a lender. The lowest rates are only available to the most qualified applicants.