A mortgage refinance replaces your current mortgage with a new one, with the same lender or a different one, usually to get a better rate, to take equity out of your home or to combine debts. The legal work is short but exact: the old mortgage has to be paid out and discharged and the new one registered in the right order. Law Wise acts on mortgage refinances, home equity lines of credit and private mortgages across the entire GTA and Ontario, from its office in Mississauga.
Why people refinance
- A lower rate or better terms. The rate or conditions you accepted when you bought may no longer be the right ones for you.
- Access to equity. Borrowing against the value built up in the home, for renovations, education, a business or another purchase.
- Debt consolidation. Replacing higher-interest debts with one mortgage payment.
- A change in ownership. Buying out a spouse or co-owner, or adding someone to title. See transfer title of property.
Refinancing only makes sense if the new terms are better than the old ones after every cost of breaking the current mortgage is counted. Do that arithmetic before you commit.
What a mortgage refinance costs
The largest cost is often the prepayment penalty for ending a closed mortgage before its term is up. According to the Financial Consumer Agency of Canada, the penalty is usually the higher of three months’ interest on what you still owe and an amount called the interest rate differential, which is based on the difference between your rate and current rates. On a large mortgage with years left on the term it can run to thousands of dollars. An open mortgage can be paid off without a penalty.
Other costs can include the lender’s discharge or administration fee, an appraisal, a title search, title insurance and legal fees. Ask your current lender for a written payout statement before you decide, so that you are working from its figure and not an estimate.
Limits and rules worth knowing
- How much you can borrow. The Financial Consumer Agency of Canada says you may usually borrow up to 80% of your home’s value in total, and up to 65% of its value on a home equity line of credit.
- Long-term mortgages. If a mortgage is not payable for more than five years, an individual borrower may pay it off at any time after five years with three months’ further interest.
- Matrimonial home. A married spouse cannot mortgage a matrimonial home without the other spouse joining in or consenting, even if only one spouse is on title.
Sources: Financial Consumer Agency of Canada, “Borrowing against home equity” and “Prepayment penalties” (both modified 15 October 2025); Mortgages Act, RSO 1990, c M.40, s 18; Family Law Act, RSO 1990, c F.3, s 21, as they read on 10 October 2026.
What the lawyer does on a refinance
- InstructionsOnce you accept the lender’s commitment, the lender sends mortgage instructions to our office.
- Title search and payoutWe search title, confirm who must sign, and order a payout statement for the mortgage being replaced. Liens, executions or tax arrears usually have to be cleared from the proceeds.
- SigningYou meet the lawyer to sign the mortgage documents and bring identification. A spouse or guarantor may need to sign as well.
- Funding and registrationThe new mortgage is registered, the old lender is paid, other debts are paid as the lender directs, and the balance is sent to you.
- Discharge and reportWe follow up until the old mortgage is discharged from title, and report to you and to the lender.
Home equity lines of credit and second mortgages
A home equity line of credit, or HELOC, is revolving credit secured by a charge on your home. A second mortgage is a further loan that sits behind your first mortgage, usually at a higher rate because the second lender takes more risk. Both are registered on title, both need the same legal steps as a first mortgage, and both must be discharged before the property can be sold with clear title.
Private mortgages
A private mortgage comes from an individual or a company that is not a bank. Borrowers turn to private lenders when a bank will not lend or time is short. The terms are often short, the rates and fees are higher, and the cost of renewing can be significant, so read the commitment for every fee and for what happens when the term ends. Law Wise acts for a borrower or for a private lender on a loan, and recommends independent legal advice for anyone asked to guarantee a loan or to sign as a spouse who is not the borrower.
Tax
Interest on a mortgage on the home you live in is generally not tax-deductible. It may be deductible if the property is rented out and earns income, or if the borrowed money is used for a business or for investments. Ask a tax adviser about your own situation before you rely on a deduction.
How Law Wise helps
- acts on refinances, lender switches, HELOCs and second mortgages
- reviews private mortgage commitments before you accept them
- gives independent legal advice to spouses and guarantors
- pays out and discharges the existing mortgage and registers the new one
- acts for private lenders on new mortgages and renewals
Your file is handled by a Law Wise lawyer licensed by the Law Society of Ontario. Service is available in English, Urdu, Punjabi and Hindi, and, if you retain the firm, fees are explained and confirmed in writing before work starts.
Common questions about mortgage refinancing
How much can I borrow when I refinance?
It depends on the lender, your income and the appraised value. The Financial Consumer Agency of Canada says you may usually borrow up to 80% of your home’s value, less what you already owe, and up to 65% on a home equity line of credit.
What does it cost to break my mortgage early?
For a closed mortgage, usually the higher of three months’ interest and the interest rate differential, plus any administration or discharge fee. Ask your lender for the amount in writing before deciding.
Do I need a lawyer to switch lenders at renewal?
Not always. For a straight switch with no new money, some lenders arrange the registration themselves through a processing service. Where you are borrowing more, changing who is on title or dealing with a private lender, a lawyer is normally required.
Does my spouse have to sign the mortgage?
If the property is a matrimonial home, your married spouse must join in or consent to the mortgage even if the title is in your name alone. Lenders often ask a spouse or guarantor to get independent legal advice.
Can I refinance if there is a lien or judgment against me?
Usually only if it is paid or otherwise dealt with on closing. The title search will show it, and most lenders will not advance funds until it is cleared.
What happens if I fall behind on my mortgage payments?
Most Ontario mortgages allow the lender to sell the property under a power of sale. The lender cannot give notice of sale until the default has lasted at least 15 days, and cannot sell until at least 35 days after the notice. Before a sale you can generally put the mortgage back in good standing by paying the arrears and the lender’s expenses. Get advice as soon as you receive a notice.
Refinancing your mortgage?
Send us your lender’s commitment or call to ask what the legal steps will be. The first consultation is free for 15 minutes, by appointment.
This page is general legal information for Ontario, current as of 10 October 2026. It is not legal advice and does not create a lawyer-client relationship. For advice about your situation, please speak with a lawyer.