TL;DR: Refinancing your mortgage can give you access to 80 percent of your home’s value minus the remaining owning on your mortgage, and minus any other expenses associated with the transaction. The costs to expect are the penalty, a discharge fee from the outgoing lender, a registration fee with your provincial land titles office, and legal fees since a lawyer will be needed.

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When it comes to refinancing there are two types available, one within your term and one at the end of your term. If you are looking to access a lower rate or some equity you usually refinance within your term. Home owners that are at the end of their term are already free to find a lower interest rate before they renew their mortgage. Therefore, if you are at the end of your term and looking to access equity, you would be refinancing. Regardless of the type of refinancing you are considering there will be costs involved.

Mortgage prepayment penalty

This is a fee charged by your lender for breaking your mortgage term early. Depending on the type of mortgage you have and who the lender is, this amount will vary significantly. We can estimate this amount for you. If you have a fixed-rate mortgage you will be charged the greater of: three months’ interest; or the interest rate differential. For variable-rate mortgages, the prepayment penalty is three months’ interest. If you are refinancing at the end of your term you won’t have to pay this penalty. 

Mortgage discharge fee

This charge applies if you are switching lenders. It is money paid to discharge your mortgage from your lender and varies among financial institutions and by province. In Alberta and British Columbia, this fee is $100 or less with all but two lenders, who charge around $300.

Appraisal

An appraisal is required virtually 100% of the time for a refinance. The cost ranges from $250 for smaller properties in major centres, to $500 or more for larger homes, larger properties, or locations that are further from where the nearest appraiser is located.

Mortgage registration fee

When you remove the current mortgage from your title and register a new mortgage amount, the provincial land titles office charges a fee. This is determined by each province and is usually less than $100.

Legal fees

Refinancing your mortgage involves title work on real property and therefore, you will need the assistance of a real estate lawyer or a notary service. Your lawyer can review your mortgage terms and conditions, register the new mortgage, and ensure that there are no liens on the property that shouldn't be there. They will also manage the handling of funds between you and the lender, and will pay out debt directly on your behalf if a debt consolidation is part of the reason for refinancing. These fees usually cost $700 to $1,000. 

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