Mortgage Refinance in Toronto

Why many Toronto owners refinance instead of moving

Buying another home in Toronto means paying Ontario's land transfer tax and the City of Toronto's municipal land transfer tax, plus realtor commission, legal fees and moving costs. Since April 1, 2026, the City also charges higher graduated municipal land transfer tax rates on high-value homes. When the reason for moving is space, a home office or a parent moving in, renovating with a refinance often costs far less than a move.

We'll lay out both paths with real numbers for your home, so the decision is yours to make with the full picture.

Adding a unit: basement suites, garden suites and multiplexes

Toronto now allows up to four homes in one residential building across the city, and up to six in the Toronto and East York district and Ward 23. Many lots can also add a garden suite or laneway suite. For a lot of families, that means a basement apartment for rental income or a separate space for parents or adult children.

Since January 15, 2025, there's also a federal insured refinance for adding a legal secondary suite. In short:

• up to 90% of the home's value after the suite is built, on homes worth less than $2 million after improvements
• up to four units in total, including yours
• you or a close relative must live in one of the units, and the new suite can't be a short-term rental
• the extra money must go to the project, and the insurer should approve it before or early in construction

Not every lender offers this yet, and each has its own rules. We'll check which lenders will do it for your plans and compare it with a standard refinance or a HELOC. Before you design anything, check your zoning with the City: see Multiplex Housing on toronto.ca and the CMHC refinance for secondary suites.

Buying out a spouse after separation

When a couple separates and one person wants to keep the Toronto home, a refinance can pay the other their share of the equity. The lender will want the signed separation agreement and will qualify the person keeping the home on their own income, so it helps to talk to us before the agreement is final. Read more in Separated but still on the mortgage?

Paying off a high-interest second mortgage

Some Toronto owners took a second or private mortgage to get through a tough stretch: a business slowdown, CRA arrears or a credit dip. Once your credit and income have recovered, refinancing that second into one first mortgage can cut your monthly cost and stop the fees from renewing every year. We'll check which lenders will look at your file now, and whether waiting a few more months would get you a better fit. See our second mortgage options.

Your penalty, step by step

Before you refinance, we work out whether breaking your mortgage now is worth it. Here's how we walk through it with you:

• Get the payout statement. We ask your lender for a written payout statement showing the exact penalty. For most fixed-rate mortgages it's the higher of three months' interest or the interest rate differential (IRD); for most variable-rate mortgages it's three months' interest.
• Add the other costs. Legal fees, an appraisal and any discharge fee.
• Compare it with what you save or gain. For example, the interest you'd stop paying on cards and loans, or the rental income a new suite could bring in.
• Look at the alternatives. Waiting for renewal, a blend-and-extend with your current lender, a HELOC, or a second mortgage that leaves your first mortgage untouched.

Sometimes refinancing now clearly wins. Sometimes waiting six months saves thousands. You'll see both before you decide.

Example: renovate or move? (illustrative)

Example only, not a real client. A couple in East York with two kids and a parent moving in need one more bedroom and a separate entrance. Selling and buying a bigger home in Toronto would mean two land transfer taxes, commission and moving costs. We'd compare that with refinancing to finish the basement as a legal suite, check whether the federal secondary suite refinance fits, and show the monthly payment and penalty for each path before they talk to a contractor.

If you're 55 or older and a bigger payment doesn't work, a reverse mortgage in Toronto may be worth comparing.