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Guide

Refinancing your mortgage: rates, the 80% limit and whether it pays

Short answer

Refinancing replaces your mortgage with a new, usually larger one, up to 80% of your home's value. Refinances cannot be insured, so they get uninsured rates (the lowest 20%+ down 5-year fixed we collected was 4.59%). Mid-term, the penalty for breaking usually decides whether it pays.

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Mitey the yeti pointing at a comparison
Mitey sets the penalty beside the interest saved: refinancing mid-term only pays when the second number is bigger.

How much you can borrow

Lenders can lend up to 80% of your home's value when you refinance; a home equity line of credit can be up to 65% of the value, and the two combined usually can't exceed 80%.

Source: Financial Consumer Agency of Canada, Borrowing home equity. Checked .

Refinance rates

Because a refinance is uninsured, compare offers with the board's 20%+ down column, and note any lender rows labelled conventional or uninsured rather than insurable. You'll also requalify at the stress-test rate.

Does it pay mid-term?

If you break a fixed mortgage to refinance, the penalty is the greater of three months' interest and the IRD. Run it in the penalty calculator, which compares the penalty with the interest you'd save at today's rate.

Alternatives

  • Blend and extend: your lender blends your current rate with today's rate on the extra money, often with no penalty.
  • HELOC: borrow against equity at a variable rate without breaking the mortgage.
  • Wait for renewal: no penalty at maturity; federally regulated lenders must send a renewal statement at least 21 days before.
Refinancing $400,000 a quarter point lower, three years left
Refinancing $400,000 a quarter point lower, three years left: inputs, steps and result
Balance$400,000
Current rate → new rate4.75% → 4.50%illustrative
Time left36 months
Interest saved (simple)$3,000
Three months' interest penalty$4,750
Net before fees-$1,750an IRD penalty could be larger

Check it in the posted-rate penalty check →

What this means for you

  • Small rate gaps rarely pay mid-term: the penalty and fees can outweigh the savings.
  • Taking equity out: compare a refinance with a HELOC or a blend-and-extend.
  • Near renewal: waiting avoids the penalty entirely.

Frequently asked questions

How much equity can I take out?

Up to 80% of your home's value, minus what you owe, through a refinance or a combination of mortgage and HELOC (FCAC).

Primary sources

  1. Financial Consumer Agency of Canada — Borrowing home equity. Checked .
  2. Financial Consumer Agency of Canada — Reduce prepayment penalties. Checked .
  3. Financial Consumer Agency of Canada — Renewing your mortgage. Checked .
  4. OSFI — Minimum qualifying rate for uninsured mortgages (effective January 29, 2026). Checked .
Penalty calculatorDoes breaking pay?Open →Is this a good rate?Paste an offer or renewal rate and see how it scores against benchmarks.isthisagoodrate.ca →Big-bank mortgages comparedHow the big banks' mortgage products, features and fine print differ.bankmortgages.ca →