Last updated: August 21, 2026

Cash-Out Refinance in Ontario: How Much You Can Take Out, and What It Really Costs

In Ontario you can refinance up to 80% of what your home is worth, take the difference in cash, and use it for anything. On a $950,000 home with $520,000 still owing, that’s up to $240,000. What most homeowners get wrong is the cost side: the prepayment penalty on your existing mortgage is usually larger than every other closing cost combined, and falling GTA prices have quietly cut what a lot of people can access.

What a cash-out refinance actually is

You replace your current mortgage with a new, larger one and take the difference in cash. It is one mortgage, one payment, one rate — which is the main thing separating it from a second mortgage or a HELOC, where the original loan stays exactly where it is.

The cash is yours to use. Most Ontario homeowners we work with are consolidating credit card and line-of-credit debt, covering a renovation, settling a tax bill, or bridging an income gap. Nobody asks you to justify it.

How much can you take out in Ontario?

The ceiling is 80% of your home’s appraised value, and that comes from federal lending rules, not provincial ones — it applies the same way in Toronto as it does in Thunder Bay.

The arithmetic is simple. Take 80% of what the home appraises at, subtract what you still owe, and what’s left is your maximum. Costs come out of that.

A Mississauga homeowner with a semi appraised at $950,000 and $520,000 left on the mortgage:

• 80% of $950,000 = $760,000 — the most the new mortgage can be
• Less the $520,000 payout of the existing mortgage
• $240,000 available, before costs

What falling GTA prices have done to that number

This is where Ontario stops being a footnote. The average GTA selling price in June 2026 was $1,058,658, down 3.9% from a year earlier, with the benchmark price off 5.4%. Prices have been drifting down, not up.

Run the same Mississauga homeowner a year earlier, when the appraisal would have come in around $1,000,000:

• 80% of $1,000,000 = $800,000, less $520,000 = $280,000 available

Same house, same mortgage, $40,000 less accessible today. If you had a number in your head from 2024 or 2025, it is probably too high now. This is also why appraisals are the single most common reason an Ontario refinance comes back smaller than expected — and why we order one before making promises.

Not sure what your place would appraise at today? Send us the address and the mortgage balance and we’ll give you a realistic range before you pay for anything. No credit check to get that answer.

Not sure which lending tier your situation fits? Speak with an Ontario mortgage broker who works with bad credit, low income and homeowners the banks turn away.

What it costs to refinance in Ontario, line by line

Almost every article on this subject stops at “there are closing costs.” Here is the actual list an Ontario homeowner pays.

The prepayment penalty is the number that decides it

On a variable rate, the penalty is three months’ interest — predictable and usually modest. Our Mississauga example at $520,000 and 3.9% works out to roughly $5,070.

On a fixed rate, it’s the interest rate differential, and the size depends entirely on how far your contract rate sits above what the lender charges today. With the Bank of Canada holding its policy rate at 2.25% as of 15 July 2026, a homeowner sitting at 3.9% is close enough to current pricing that the IRD calculation usually falls back to the three-month floor. A homeowner who locked in at 5.5% or higher in 2023 is in a different position, and the penalty can run five figures.

Get the exact figure from your lender in writing before you decide anything. One phone call. Everything else in this article is secondary to that number.

The Ontario cost you don’t pay

Ontario land transfer tax is payable “when the transfer is registered” — that is, when land changes hands. A refinance registers a charge against title you already own, not a transfer of it, so no land transfer tax applies.

This matters more than it sounds. A Toronto homeowner thinking about selling and buying somewhere cheaper pays both provincial and municipal land transfer tax on the new purchase, and in Toronto that is a five-figure hit before a single moving box is packed. Refinancing avoids it entirely. It is one of the few genuine cost advantages Ontario homeowners have over their neighbours who move.

Can you do this in Ontario with bruised credit?

Yes, though not usually at a bank.

Banks in Ontario want a clean credit profile and provable income. Once your score dips or your income is hard to document, the file moves to a B lender or a private lender, where the decision leans on the equity in the property rather than the score on your file. Rates are higher and there are lender and broker fees, but the deal gets done.

If that’s your situation, these will be more useful than this page:

• Bad credit mortgage refinance in Ontario: a step-by-step guide
• Can you get a home equity loan with no income in Ontario?
• Get a HELOC with bad credit in Ontario

When refinancing is the wrong tool

Three situations where we tell Ontario homeowners not to do this.

Your existing rate is very good and the penalty is enormous. If you are sitting on a low fixed rate with years to run, breaking it can cost more than the interest you’d save. A second mortgage leaves the first one untouched. We’ve run both sets of numbers side by side in cash-out refinance vs. second mortgage: which is cheaper in Ontario.

You need the money this week. An Ontario refinance runs one to three weeks once the appraisal is in. Private second mortgages fund considerably faster.

You need a smaller amount, occasionally. Refinancing $25,000 out of a $600,000 mortgage means paying a penalty and full closing costs to access very little. A HELOC or a small second is the cheaper structure.

If you’re already behind on payments

Ontario’s power of sale process moves quickly — considerably faster than foreclosure does in provinces like Alberta, and your lender can pursue you for any shortfall after the sale. If you have missed payments, a conventional refinance is likely off the table until the arrears are cleared, and the clock matters more than the rate does. Read mortgage arrears in Ontario: what are your options first, then call somebody. Waiting is the expensive choice.

How an Ontario refinance runs, start to finish

1. Value the property. An appraisal, or a broker’s realistic estimate to start.
2. Get your penalty in writing from your existing lender.
3. Application and documents. Income, the current mortgage statement, property tax bill, ID.
4. Approval and conditions. Typically a few days.
5. Lawyer. Your Ontario lawyer discharges the old mortgage, registers the new charge in Teraview, and releases the funds.
6. Money lands, usually one to three weeks from start.

Frequently asked questions

How much equity do I need to refinance in Ontario? Enough that 80% of the appraised value exceeds your current balance by a useful margin. Below roughly 20% equity there is nothing to take out, and a second mortgage or a different approach makes more sense.

Does refinancing trigger Ontario land transfer tax? No. Land transfer tax applies when land is transferred. A refinance registers a new charge on a property you already own, so it isn’t payable — provincially or municipally in Toronto.

Do I have to pass the stress test again? If you’re refinancing with a federally regulated lender, yes — that’s a federal OSFI rule, not an Ontario one, and it applies identically across the country. B and private lenders are not bound by it, which is often the whole reason a file moves to them.

Can I refinance with a credit score under 600? Often, yes, through a B or private lender, provided the equity is there. The rate will be higher than a bank’s and there will be lender fees. It’s usually a 12 to 24 month solution while credit is rebuilt.

How long does a cash-out refinance take in Ontario? One to three weeks in most cases, with the appraisal and the lawyer being the two steps that set the pace.

What if my home appraises for less than I expected? Your maximum drops with it, since the 80% ceiling is calculated on the appraised value rather than what you believe the home is worth. Given GTA prices have fallen year over year, this is happening more often. A second appraisal is sometimes worth ordering if the first one looks clearly wrong.

Can I refinance if I’m behind on payments? Not usually with a bank. Private lenders in Ontario will sometimes refinance a file in arrears and roll the arrears into the new mortgage, but the situation needs addressing quickly — Ontario’s power of sale timeline does not wait.

Find out what you can actually take out

We’re an Ontario mortgage brokerage that works with homeowners the banks have turned down — bruised credit, self-employed income, arrears, CRA debt. We’ll tell you what your equity supports and what it will cost, before you commit to anything.

Call 1-866-329-8801 or start with a no-obligation review. If you’re in the GTA, our Mississauga homeowners page has local numbers and more options.

Parm Mehmi, Principal Broker · FSRA 13163  Last updated 28 July 2026