Refinancing replaces your existing mortgage with a new one — at a different rate, amount, or terms. This checklist walks you through every step from evaluating whether refinancing makes sense through closing on your new mortgage.
Step 1: Determine If Refinancing Makes Sense
Identify Your Goal
- Lower my rate — Current rates are significantly lower than my existing rate
- Consolidate high-interest debt — Roll credit card or other debt into a lower mortgage rate
- Access equity (cash-out) — Pull cash out for renovations, investing, or other needs
- Change my mortgage type — Switch from variable to fixed (or vice versa)
- Change my amortization — Extend to lower payments or shorten to pay off faster
- Remove a co-borrower — Common after divorce or separation
Calculate the Costs
- Determine your current mortgage penalty:
- Variable rate: typically 3 months’ interest
- Fixed rate: greater of 3 months’ interest or IRD
- Use the penalty calculator for an estimate
- Estimate legal/notary fees: $500–$1,500
- Estimate appraisal fee: $300–$500 (often covered by the new lender)
- Estimate discharge fee from current lender: $200–$400
- Total estimated refinancing cost: $________
Calculate the Savings
- Use the refinance calculator to compare your current mortgage vs the new terms
- Calculate monthly savings: old payment minus new payment = $________/month
- Calculate total savings over the new term after subtracting all costs
- Calculate break-even point: total costs ÷ monthly savings = ________ months
- Decision: If break-even is within the first half of your new term, refinancing is likely worth it
Break-Even Quick Reference
| Penalty + Costs | Monthly Savings | Break-Even |
|---|---|---|
| $5,000 | $200/month | 25 months |
| $10,000 | $300/month | 33 months |
| $15,000 | $400/month | 38 months |
| $20,000 | $500/month | 40 months |
If you plan to stay in the home beyond the break-even point, refinancing generates net savings.
Step 2: Gather Your Documents
Standard Documents Required
- Government photo ID
- Current mortgage statement (showing balance, rate, maturity date)
- Recent property tax bill
- Proof of home insurance
- Recent pay stubs (2–3 months)
- T4 slips (last 2 years)
- Notice of Assessment from CRA (last 2 years)
- Bank statements (90 days)
- List of all debts with balances and monthly payments
- Full document checklist for your situation
Additional Documents (If Applicable)
- Self-employed: T1 General, financial statements, business licence — see self-employed guide
- Rental income: lease agreements, rent rolls — see rental income qualification
- Debt consolidation: statements for all debts being consolidated (credit cards, loans, lines of credit)
- Divorce/separation: separation agreement, court order for property division
Step 3: Shop for the Best Refinance Rate
Get Multiple Quotes
- Contact a mortgage broker — they access multiple lenders
- Get a quote from your current lender (they may offer a better deal to retain you)
- Check online lenders for competitive rates
- Compare at least 3 offers
For Each Offer, Confirm
- Interest rate (fixed or variable)
- Term length
- Maximum refinance amount (up to 80% LTV)
- Prepayment privileges
- Penalty calculation method for the new mortgage
- Whether the lender covers appraisal and/or legal fees
- Any conditions or restrictions
- Use the mortgage comparison worksheet to compare side by side
Important: Refinancing Always Creates an Uninsured Mortgage
Even if your current mortgage is insured, refinancing converts it to uninsured. This means:
- You lose the lower insured mortgage rate
- The new rate may be 0.10–0.30% higher than insured rates
- OSFI capital requirements make refinance rates slightly higher
- Factor this into your savings calculation
Step 4: Apply and Get Approved
Application Process
- Submit your application and documents to the chosen lender
- Lender orders a property appraisal (to confirm your home value and maximum LTV)
- Lender underwrites the application (verifies income, credit, property)
- You must pass the stress test — qualifying at contract rate + 2% or 5.25%
- Lender issues a mortgage commitment (conditional approval)
- Review the commitment carefully — confirm rate, terms, conditions
Appraisal
- Review the appraised value — is it what you expected?
- If the appraisal is lower than expected, your maximum refinance amount decreases
- Appraisal must support the LTV ratio needed for your refinance
Step 5: Legal Process
Engage a Lawyer/Notary
- Hire a real estate lawyer (the lender may have preferred partners)
- Lawyer conducts a title search
- Lawyer arranges discharge of existing mortgage
- Lawyer registers the new mortgage
- Review and sign all documents
Costs at This Stage
| Cost | Typical Amount |
|---|---|
| Legal fees | $500–$1,500 |
| Title insurance (if required) | $300–$500 |
| Discharge fee (from current lender) | $200–$400 |
| Registration fee | $50–$150 |
Some new lenders cover legal fees or offer cash-back to offset costs — confirm what is included in your offer.
Step 6: Closing
Before Closing
- Confirm closing date with your lawyer
- Verify the new mortgage amount, rate, and terms one final time
- Confirm how leftover funds will be delivered (if cash-out — direct deposit, cheque, or applied to debts)
- If consolidating debt: confirm which debts will be paid out at closing (lender may disburse directly to creditors)
On Closing Day
- Old mortgage is discharged
- New mortgage is registered on title
- Funds are advanced by the new lender
- Cash-out amount or debt payoff is processed
- Your new payment schedule begins
After Closing
- Set up automatic payments for the new mortgage
- Confirm the first payment date
- If debts were consolidated: verify all old accounts show zero balance and close credit cards if desired (but keep 1–2 open for credit history)
- Set a calendar reminder for 120 days before your NEW maturity date
- Review prepayment strategies for your new mortgage
When NOT to Refinance
Refinancing is not always the right call. Reconsider if:
| Situation | Why It May Not Make Sense |
|---|---|
| Penalty exceeds 2+ years of savings | Break-even is too far out |
| You are within 12 months of renewal | Wait and renegotiate at renewal (no penalty) |
| You plan to sell the home soon | Costs may not be recovered before sale |
| Your credit score has dropped | You may not qualify for a better rate |
| Your home value has decreased | Lower appraisal means less equity to access |
Alternatives to Refinancing
| Alternative | When to Consider It | Guide |
|---|---|---|
| HELOC | Need ongoing access to equity | HELOC vs refinance |
| Home equity loan | Need a lump sum without breaking your mortgage | HEL guide |
| Blend-and-extend | Want a better rate without penalty | Ask your current lender |
| Wait for renewal | Within 12–18 months of maturity | Renewal checklist |
Related Resources
- When Should I Refinance? — Comprehensive refinancing guide
- Cash-Out Refinance — Accessing equity through refinancing
- Mortgage Penalty Calculator — Estimate your breakage penalty
- Refinance Calculator — Calculate new payment and savings
- HELOC vs Refinance — Which equity option is better for you
- Breaking Mortgage at the Big Five Banks — Penalty comparison by bank