Not every mortgage is the same. Here's how each product works and when it makes sense.
Mortgage Refinancing
Refinancing means replacing your current mortgage with a new one — typically at a lower rate, with different terms, or for a larger amount to access your home equity. It's one of the most common ways Canadian homeowners restructure their finances.
Who Is It For?
Homeowners looking to lower their rate. If rates have dropped since you signed your mortgage, refinancing could save you hundreds per month.
People consolidating debt. Rolling high-interest credit cards and loans into your mortgage at 4-5% instead of 20%+ can dramatically reduce your interest costs.
Those accessing home equity. Need funds for renovations, investing, or a major purchase? You can borrow up to 80% of your home's value.
Homeowners wanting to change their terms. Switch from variable to fixed, shorten/extend your amortization, or adjust your payment schedule.
How It Works
When you refinance, your current mortgage is discharged and replaced with a new one. You can borrow up to 80% of your home's appraised value, minus what you currently owe. The difference is available to you as cash.
For example, if your home is worth $800,000 and you owe $350,000, you could refinance up to $640,000 and receive up to $290,000 in equity.
Key Details
Maximum LTV: 80% of appraised home value
Prepayment penalty: If you break your mortgage mid-term, expect a penalty. Variable rate: typically 3 months' interest. Fixed rate: the greater of 3 months' interest or the Interest Rate Differential (IRD).
When your mortgage term ends (typically every 1-5 years), you need to renew. You can stay with your current lender or transfer to a new one — often at a better rate. A transfer is sometimes called a "switch" and is one of the easiest ways to save money on your mortgage.
Who Is It For?
Anyone whose mortgage term is ending. If your renewal is coming up in the next 120 days, now is the time to shop.
Homeowners who got a high rate last time. Rates change constantly. What was competitive 5 years ago might not be today.
People who want a better deal. You don't need a complicated financial reason — a lower rate means more money in your pocket every month.
How It Works
Renewing with your current lender is the simplest option — you sign a new term agreement and continue. No appraisal, no qualification, no legal fees. But the rate they offer is rarely their best one.
Transferring to a new lender means a new lender pays off your old mortgage and issues a new one. You'll need to requalify (income, credit, stress test), but many lenders cover the legal and appraisal costs to win your business. The process typically takes 2-4 weeks.
Key Details
No penalty at renewal. When your term expires, you can switch lenders without any prepayment penalty.
Start shopping 120 days early. Lock in a rate hold while you compare options. This protects you if rates rise.
Stress test applies if switching. You'll need to qualify at the higher of your rate + 2% or the Bank of Canada qualifying rate.
Transfer costs: Often $0 — many lenders cover legal and appraisal fees to attract new clients.
Compare your renewal options
See how much you could save by switching to a lower rate at renewal.
A home equity loan is a second mortgage that lets you borrow a lump sum against the equity in your home, without touching your existing first mortgage. You receive the full amount upfront and repay it with fixed monthly payments over a set term.
Who Is It For?
Homeowners who want to keep their current mortgage. If you have a great rate on your first mortgage, a home equity loan lets you access equity without breaking it.
People who need a specific amount. Renovations, tuition, a down payment on a second property — a lump sum works better than a revolving credit line for one-time needs.
Those who prefer fixed payments. Unlike a HELOC, a home equity loan has a fixed rate and predictable payments from day one.
How It Works
Your total borrowing (first mortgage + home equity loan) typically can't exceed 80% of your home's appraised value. The home equity loan sits behind your first mortgage as a second charge on the property.
For example, if your home is worth $700,000 and you owe $350,000 on your first mortgage, you could potentially borrow up to $210,000 as a home equity loan ($700,000 × 80% - $350,000).
Key Details
Maximum combined LTV: 80% of appraised home value
Rate: Typically higher than a first mortgage (usually 1-3% more) since it's a second charge
A HELOC is a revolving line of credit secured against your home's equity. Think of it like a credit card backed by your house — you can draw funds as needed, repay them, and draw again, up to your approved limit. You only pay interest on what you actually use.
Who Is It For?
Homeowners who want flexible access to funds. A HELOC is ideal when you don't know exactly how much you'll need or when you'll need it.
People funding ongoing projects. Home renovations done in phases, tuition payments spread over semesters, or business expenses that fluctuate.
Those looking to consolidate debt over time. Use the HELOC to pay off high-interest debt, then pay it down at a much lower rate.
Emergency fund alternative. Many homeowners set up a HELOC as a safety net — it costs nothing until you use it.
How It Works
A HELOC lets you borrow up to 65% of your home's appraised value on its own, or up to 80% when combined with a mortgage. The credit limit is set once, and you can draw and repay as often as you like during the draw period.
Most HELOCs are interest-only during the draw period, meaning your minimum payment covers only the interest on what you've borrowed. You can pay down the principal at any time without penalty.
Key Details
Maximum LTV: 65% standalone, or 80% combined with a mortgage
Rate: Variable rate, typically prime + 0.5% to prime + 1%
Payment type: Interest-only minimum payments (you can pay more at any time)
Revolving: Repaid amounts become available to borrow again
No fixed term: The credit line stays open as long as you maintain your mortgage in good standing
HELOC vs. Home Equity Loan
HELOC: Revolving credit, variable rate, interest-only payments, flexible draw — best for ongoing or unpredictable needs.
Home Equity Loan: Lump sum, fixed rate, fixed payments — best for a one-time, known amount.
See what your HELOC could look like
Calculate your maximum credit limit and estimated monthly interest payments.
In Canada, mortgages fall into insurance categories that affect your rate, qualification, and what lenders can offer you. Insured and insurable mortgages both carry mortgage default insurance, which protects the lender — and gets you a lower rate in return.
What's the Difference?
Insured (high-ratio): You put down less than 20%, so mortgage default insurance from CMHC, Sagen, or Canada Guaranty is required by law. The insurance premium is added to your mortgage balance.
Insurable (conventional): You put down 20% or more, but the property and mortgage still meet insurer guidelines. The lender chooses to insure the mortgage on the back end (called portfolio or bulk insurance). You don't pay the premium — the lender does.
Who Is It For?
First-time home buyers. Most FTHB purchases are insured since the minimum down payment is 5%. Insured mortgages for first-time buyers allow purchase prices up to $1.5 million.
Buyers putting 5-19.99% down. Insurance is mandatory, but you get access to the lowest rates available.
Buyers putting 20%+ down on a qualifying property. Your mortgage may be insurable, giving you rates very close to insured — typically 0.05-0.10% higher.
Key Details
CMHC insurance premiums: Range from 2.80% to 4.00% of the mortgage amount, depending on your down payment percentage. Added to your mortgage balance.
Purchase price limits: Insured mortgages allow up to $1.5M for first-time buyers, $1M for non-FTHB. Above these thresholds, the mortgage becomes uninsurable.
Maximum amortization: 25 years for insured mortgages (first-time home buyers), 30 years for non-first-time buyer insured. Insurable mortgages can go up to 30 years.
Rate advantage: Insured mortgages get the lowest rates because lenders carry zero default risk. Insurable rates are very close behind.
Stress test applies: You must qualify at the higher of your contract rate + 2% or the minimum qualifying rate (currently 5.25%).
CMHC Premium Schedule
5% down (95% LTV): 4.00% premium
10% down (90% LTV): 3.10% premium
15% down (85% LTV): 2.80% premium
For example, on a $500,000 home with 5% down ($25,000), your CMHC premium would be $19,000 (4.00% × $475,000), bringing your total mortgage to $494,000.
Is Your Transfer Insured or Uninsurable?
Answer a few quick questions to find out how your mortgage transfer would be classified.
An uninsurable mortgage is one that doesn't qualify for mortgage default insurance from CMHC, Sagen, or Canada Guaranty. This doesn't mean you can't get a mortgage — it means the lender takes on 100% of the default risk, which affects your rate and available options.
What Makes a Mortgage Uninsurable?
Purchase price over $1.5M (FTHB) or over $1M (non-FTHB) — exceeds the insurable threshold
Refinances — when you break and replace your mortgage to access equity, the new mortgage is uninsurable
Amortization over 30 years — extended amortizations beyond insurer limits
Non-owner-occupied / rental properties — investment properties cannot be insured
Properties that don't meet insurer guidelines — certain property types (mixed-use, large acreage, etc.)
Who Is It For?
Buyers of higher-value homes. If you're purchasing above the $1M-$1.5M threshold, your mortgage will be uninsurable regardless of your down payment.
Homeowners refinancing. Any refinance transaction is classified as uninsurable, even if the original mortgage was insured.
Real estate investors. Rental and investment properties always fall into the uninsurable category.
Anyone needing an extended amortization. If you want a 35-year amortization to lower payments, only uninsurable mortgage products offer this (through select lenders).
Key Details
Minimum 20% down payment. Since insurance isn't available, lenders require at least 20% equity.
Higher rates. Typically 0.10-0.25% higher than insured/insurable rates, since the lender bears all the risk.
Fewer lender options. Not all lenders offer uninsurable mortgages. Major banks, credit unions, and monoline lenders with large balance sheets are the main sources.
More flexible terms. Some lenders offer extended amortizations (up to 35 years), interest-only options, or other features not available on insured products.
Stress test still applies. Even though the mortgage is uninsurable, you must still qualify at the stress-tested rate.
Is Your Transfer Insured or Uninsurable?
Answer a few quick questions to find out how your mortgage transfer would be classified.
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