Mortgage Refinancing in London, Ontario

How much equity you can access

Conventional refinances are generally limited to 80% of the appraised value of the property. Mortgage default insurance is not available on refinances, so the 80% ceiling is firm with prime lenders. An appraisal is almost always required, and it is the appraised value — not your estimate or a neighbour's sale price — that sets the number.

Reasons that usually hold up

• Consolidating credit card or unsecured line-of-credit balances carrying much higher interest
• Funding renovations that you'd otherwise put on credit at a far higher rate
• Down payment for a second or investment property, where the overall plan makes sense
• Divorce or separation buyouts requiring one party to be removed from title

The costs to weigh

Breaking mid-term triggers a prepayment penalty — three months' interest on most variable mortgages, or the greater of that and an interest rate differential on fixed. Add appraisal, legal fees and possibly a discharge fee. If the penalty is large and your maturity is close, waiting for renewal is often the better call.

When refinancing is the wrong tool

If the underlying issue is ongoing overspending, consolidating debt into the mortgage without changing the pattern typically leads to the cards filling back up while the mortgage is now larger. Refinancing also stretches short-term debt over a long amortization, which lowers the monthly payment but can raise total interest paid unless you keep payments up.