Mortgage Refinancing in Ontario

Mortgage refinancing may allow a property owner to replace an existing mortgage, increase the amount borrowed, change lenders, consolidate debts, or access equity in the property.

A real estate lawyer completes the legal work required by the lender, reviews relevant information shown on the parcel register, prepares and registers the new mortgage, pays out existing secured debts where required, and disburses the remaining funds in accordance with the lender’s instructions and the borrower’s written directions.

Nobari Law Professional Corporation assists property owners with residential mortgage refinancing and select commercial refinancing transactions in Ontario.

Mortgage refinancing generally involves replacing or changing the financing secured against a property.

A refinance may be used to:

• move the mortgage to a different lender; 
• borrow additional funds using available property equity; 
• consolidate credit cards, loans, or other debts; 
• combine an existing mortgage and secured line of credit; 
• change the mortgage term, amortization, or interest-rate structure; 
• remove and replace an existing mortgage registration; or 
• obtain financing for renovations, investments, or other purposes. 

The lender or mortgage professional determines whether the borrower qualifies, the amount available, and the financial terms of the mortgage. Ontario mortgage brokers and agents must generally be licensed through the Financial Services Regulatory Authority of Ontario. 

No.

A mortgage renewal generally occurs at the end of the existing mortgage term and may simply continue the mortgage with the same lender under new interest-rate and payment terms.

A mortgage refinance usually involves a more significant change, such as increasing the amount borrowed, changing lenders, extending the amortization, or registering a new mortgage against the property.

Legal services may not be required for a straightforward renewal with the same lender where no new mortgage is registered. A refinance commonly requires legal work because the lender may require a new mortgage to be prepared and registered on title. 

Contact a real estate lawyer after receiving approval or a mortgage commitment from the lender or mortgage broker.

The lender must then send its mortgage instructions directly to the lawyer. These instructions explain the lender’s requirements and the conditions that must be satisfied before the funds can be released.

Mortgage instructions should be provided well before the intended closing date. Late instructions may leave less time to:

• review relevant information shown on the parcel register;
• obtain payout information; 
• address lender conditions; 
• prepare and sign the mortgage documents; 
• obtain insurance confirmation; 
• arrange closing funds; and 
• complete registration. 

To begin the refinancing process, the borrower should generally provide:

• the property address; 
• the lender or mortgage broker’s contact information; 
• a copy of the mortgage commitment, if available; 
• valid government-issued identification; 
• marital-status information; 
• a recent property-tax bill; 
• condominium information, where applicable; 
• current mortgage and secured line-of-credit statements; 
• property-insurance information; 
• details of any judgments, liens, court orders, or other known title matters; and 
• written instructions concerning the permitted use or delivery of the refinance proceeds. 

Additional documents may be required depending on the lender, property, ownership, and transaction.

Do not send original documents, identification, complete account numbers, passwords, or other sensitive information unless requested by Nobari Law Professional Corporation. If requested, please follow the document-sending instructions provided by the firm.

The new lender may require existing mortgages and secured lines of credit to be paid in full and discharged from title.

The payout amount may include:

• the outstanding principal; 
• accrued interest; 
• a prepayment penalty; 
• discharge or administration fees; 
• amounts borrowed under a secured line of credit; and 
• other charges imposed by the existing lender. 

The payout amount may therefore be higher than the balance shown on a recent statement.

A lender may charge a prepayment penalty when a borrower breaks a closed mortgage, transfers it to another lender before the end of the term, or repays it early. Borrowers should ask the existing lender for a current payout or penalty estimate before deciding to refinance.

The lawyer must follow the new lender’s mortgage instructions.

The lender may require the mortgage funds to be used first to:

• pay out an existing mortgage; 
• close a secured line of credit; 
• pay property-tax arrears; 
• pay judgments, liens, or other secured debts; 
• pay legal fees and closing expenses; or 
• satisfy other lender conditions. 

Any remaining funds may then be disbursed in accordance with the lender’s instructions and the borrower’s written directions.

The borrower may not receive the full mortgage amount because required payouts, lender charges, legal fees, registration costs, and other authorized payments are deducted before the remaining proceeds are released.

Mortgage refinancing costs may include:

• legal fees and disbursements; 
• land-registration and title-search fees; 
• lender administration or processing fees; 
• mortgage broker fees, where applicable; 
• appraisal fees; 
• discharge fees; 
• prepayment penalties; 
• title-insurance costs where required; 
• property-tax arrears or condominium arrears; and 
• other amounts required under the lender’s instructions. 

Changing lenders or breaking a mortgage before the end of its term may result in setup, appraisal, discharge, registration, administration, or prepayment charges. Borrowers should consider the full cost of refinancing rather than comparing interest rates alone. 

Legal fees and disbursements may vary depending on the lender’s requirements, the number of payouts, title issues, ownership changes, and the complexity of the transaction.

A mortgage refinance that does not change the property’s ownership generally does not involve Ontario land transfer tax.

However, if the refinancing transaction also adds or removes an owner from title, land transfer tax may apply depending on the circumstances and the consideration being given. Mortgage debt assumed by a new owner may form part of the taxable consideration. Ontario land transfer tax generally applies when a person acquires land or a beneficial interest in land. 

Any proposed ownership change should be discussed with the lawyer before the refinance is approved or the mortgage instructions are issued.

Adding or removing a spouse, partner, relative, or other person from ownership is not simply part of an ordinary refinance.

A title change may involve:

• land transfer tax; 
• income-tax consequences; 
• mortgage-lender approval; 
• independent legal advice; 
• family-law considerations; 
• creditor considerations; and 
• changes to the parties’ estate plans. 

The lawyer should be advised early if the intended transaction includes both refinancing and a change in ownership.

Where the property is a matrimonial home, the borrower’s spouse may need to join in or consent to the mortgage even if the spouse is not a registered owner.

Ontario’s Family Law Act generally prevents a spouse from disposing of or encumbering an interest in a matrimonial home without the other spouse’s participation or consent, subject to limited exceptions. 

The borrower should provide accurate marital-status and occupancy information at the beginning of the transaction.

The lender or mortgage professional determines whether the borrower qualifies and establishes the financial terms of the mortgage. The real estate lawyer does not select the mortgage product or determine whether refinancing is financially beneficial.

Borrowers should obtain appropriate mortgage, financial, accounting, or tax advice where required.

Before the refinancing date, the borrower will generally need to:

• provide the requested identification and property information; 
• ensure the lender sends complete mortgage instructions; 
• maintain property insurance; 
• provide insurance confirmation showing the lender’s interest where required; 
• review and sign the mortgage and closing documents; 
• provide any funds required to complete the transaction; 
• stop using accounts that must be paid out or closed; and 
• advise the lawyer promptly of any changes affecting the property, ownership, or financing. 

The borrower should not make commitments based on receiving the refinance proceeds at a particular time until the lawyer confirms that the transaction has been completed.

On the scheduled refinancing date, the lawyer may:

• confirm that the lender’s requirements have been satisfied; 
• receive the mortgage funds; 
• register the new mortgage; 
• pay out existing mortgages and required debts; 
• complete other payments required by the lender; 
• hold back any amount needed to address an outstanding matter; and 
• disburse any remaining proceeds in accordance with the lender’s instructions and the borrower’s written directions. 

Completion depends on receiving the lender’s funds, registration of the mortgage, and satisfaction of the applicable closing requirements.

Nobari Law Professional Corporation provides legal assistance with residential mortgage refinancing and select commercial refinancing transactions in Ontario.

Our services may include:

• reviewing the lender’s instructions and relevant information shown on the parcel register;
• communicating with the lender, mortgage broker, and existing secured creditors; 
• obtaining mortgage and secured line-of-credit payout statements; 
• preparing and reviewing the refinancing documents; 
• registering the new mortgage; 
• paying out and arranging for the discharge of existing secured debts; 
• addressing applicable matrimonial-home requirements; 
• disbursing funds in accordance with the lender’s instructions and the borrower’s written directions; and 
• reporting to the borrower and lender after completion. 

Every refinancing transaction is different. The legal work required will depend on the lender, title, existing mortgages, ownership, intended use of funds, and surrounding circumstances.

Legal assistance helps ensure that the new mortgage is properly registered, the lender’s requirements are completed, existing secured debts are addressed, and the refinance proceeds are disbursed correctly.

Contact Nobari Law Professional Corporation to discuss a residential mortgage refinance or select commercial refinancing transaction in Ontario.