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Refinancing to Access Equity

Refinancing to Access Equity

Refinancing3 min readFebruary 11, 2026
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Refinancing to access home equity is a strategy that allows homeowners to borrow against the net value accumulated in their property. In Canada, OSFI limits this type of refinancing to 80% of the property's market value under Guideline B-20. Available equity is calculated as follows: property market value multiplied by 80%, minus the current mortgage balance. The released funds can be used for various purposes: home renovations, real estate investment, business financing, education, or any other liquidity need. In Quebec, this transaction requires a notary under the Civil Code of Quebec (CCQ) for the preparation of the mortgage deed. The AMF-certified mortgage broker must assess the appropriateness of this strategy based on the borrower's overall financial situation, in compliance with the LDPSF. CMHC does not insure refinances for equity access purposes, meaning the borrower must maintain at least 20% equity in the property. Refinancing costs include the prepayment penalty, notary fees, property appraisal, and discharge fees. The borrower must requalify under current criteria, including the OSFI stress test.

Accessing Your Property Equity Through Refinancing

For many Quebec homeowners, the net value accumulated in their property represents a significant but often inaccessible asset. Cash-out refinancing is a financing strategy that converts a portion of this value into usable liquid funds. Whether to finance major renovations, invest in rental real estate, consolidate debts, or start a business project, your home equity can become a powerful financial tool when used wisely.

Understanding Available Equity

The equity available for refinancing is determined by your property's market value and Canadian regulatory limits. OSFI's Guideline B-20 sets the maximum loan-to-value ratio at 80% for conventional refinancing. For example, if your home is appraised at $450,000 and your mortgage balance is $250,000, the gross equity is $200,000, but accessible equity through refinancing is limited to $110,000 ($450,000 x 80% = $360,000, minus $250,000). Refinancing fees must then be subtracted to déterminé the net amount actually available.

Equity (net value)
The difference between a property's market value and the total balance of loans secured against it. Equity increases as the mortgage balance decreases through regular payments and as the property value appreciates. In Quebec, refinancing-accessible equity is capped at 80% of market value minus the current mortgage balance.

Common Uses of Cash-Out Refinancing

  1. Home renovations: Renovations are one of the most popular reasons for accessing equity. They can increase the property's value and improve quality of life. Certain energy-efficient renovations may even qualify for government incentive programs.
  2. Real estate investment: Using equity as a down payment for a rental property is a widespread investment strategy in Quebec. Interest on the portion borrowed to generate rental income is generally tax-deductible, per Canada Revenue Agency rules.
  3. Debt consolidation: Consolidating high-interest debts (credit cards, personal loans) into the mortgage reduces the overall interest rate. However, amortizing over a longer period can increase total interest costs.
  4. Personal or business projects: Education funding, business startup, cottage or recreational vehicle purchase: funds released through refinancing can serve any project. The mortgage rate is generally lower than other forms of financing.

The Process in Quebec

Refinancing to access equity follows a well-defined process in Quebec. Your AMF-certified mortgage broker will first analyze your complete financial situation, including your income, debts, credit score, and estimated property value. The lender will require a professional appraisal to confirm market value. You will need to requalify under current criteria, including the OSFI stress test (contractual rate + 2% or 5.25%, whichever is higher). Under the CCQ, a notary must prepare and register the new mortgage deed at the Quebec Land Registry. The entire process generally takes 3 to 6 weeks.

Costs and Considerations

  • Prepayment penalty: the most variable and potentially highest cost. On a fixed rate, the IRD can amount to thousands of dollars.
  • Notary fees: $1,000 to $2,000 in Quebec for the refinancing mortgage deed.
  • Property appraisal: $300 to $500 for a certified appraisal.
  • Discharge fees: if switching lenders, expect $400 to $800 for cancelling the old mortgage.
  • Stress test: it is necessary to qualify at the contractual rate + 2% or 5.25% (whichever is higher), which can reduce the accessible amount if your income is limited.

Before proceeding, discuss possible alternatives with your AMF-certified broker. Depending on your situation, a home equity line of credit (HELOC) or a second mortgage might better meet your needs, especially if your current mortgage has a favourable rate you do not want to lose. The broker's professional duty under the LDPSF is to present the most advantageous option for your particular situation.

Frequently Asked Questions

How much equity can I take out of my property?
In Canada, you can refinance up to 80% of your property's market value. For example, if your home is worth $500,000 and your mortgage balance is $280,000, your accessible equity is $120,000 ($500,000 x 80% = $400,000, minus $280,000). The exact amount may vary depending on the lender and your repayment capacity.
Do I need to justify what I use the refinancing funds for?
For a conventional (uninsured) refinance, most lenders do not require detailed justification of fund usage. However, if the funds are being used for investment or starting a business, the lender may ask additional questions to assess risk. Your AMF-certified broker will guide you based on the chosen lender's requirements.
Does accessing equity affect my monthly payments?
Yes. Since the mortgage balance increases, your monthly payments will be higher. The increase depends on the amount withdrawn, the interest rate, and the chosen amortization period. Your broker must verify that your debt service ratios (GDS and TDS) comply with the lender's and OSFI's limits.
Are there tax advantages to refinancing for investment?
In Canada, interest paid on a loan used to generate investment income (dividends, interest, rent) is generally tax-deductible. However, it is essential to keep the borrowed funds in a separate account and document the investment use. Consult an accountant to confirm deductibility in your situation.
Can I access equity without breaking my mortgage?
Yes. Several alternatives allow equity access without refinancing: a home equity line of credit (HELOC) if you have a conventional mortgage, a second mortgage from a private lender, or a secured personal loan. Each option has its pros and cons that your AMF-certified broker can compare for you.

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Educational information only. This does not constitute financial advice under the Act Respecting the Distribution of Financial Products and Services (LDPSF). Consult an AMF-certified mortgage broker before making any financial decision.

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