Appendix ID: mortgage-refinance-planning-guide
Step 1 — Define the objective
- [ ] Lower payment
- [ ] Lower total cost
- [ ] Debt consolidation
- [ ] Home improvement
- [ ] Investment/business purpose
- [ ] CRA/tax payout
- [ ] Spousal/partner buyout
- [ ] Private mortgage exit
- [ ] Change borrower/title
- [ ] Maturity solution
Step 2 — Calculate the full required mortgage
| Use of funds | Amount |
|---|---|
| First mortgage payout | |
| HELOC payout | |
| Second/private mortgage payout | |
| Penalty | |
| Consumer debts | |
| Tax/property/condo arrears | |
| Cash required | |
| Lender/brokerage fees | |
| Legal/appraisal/discharge costs | |
| Reserve/holdback | |
| Total mortgage required |
Step 3 — Equity test
Resulting LTV = Total secured debt after closing ÷ Accepted property value × 100
| Value scenario | Value | Resulting LTV |
|---|---|---|
| Borrower estimate | ||
| Conservative estimate | ||
| Appraised/accepted value | ||
| 10% stress decline |
Step 4 — Qualification and suitability
- [ ] Income supports qualifying payment
- [ ] Actual household budget supports payment
- [ ] Credit event is explained
- [ ] Debt payout improves cash flow
- [ ] Cards/lines will be closed or managed
- [ ] Emergency reserve remains
- [ ] Holding period exceeds break-even
- [ ] Tax advice obtained for claimed deductibility
- [ ] First-mortgage preservation alternatives compared
- [ ] Private/alternative exit documented where applicable
Step 5 — Break-even
| Item | Current | Proposed |
|---|---|---|
| Mortgage payment | ||
| Other debt payments | ||
| Total monthly payments | ||
| Monthly cash-flow difference | ||
| Upfront cost | ||
| Break-even months | ||
| Balance after holding period | ||
| Total cost after holding period |
Step 6 — Behavioural safeguards
- [ ] Revolving accounts reduced/closed
- [ ] Automatic payment established
- [ ] Automatic savings established
- [ ] 90-day and annual review scheduled
- [ ] No re-borrowing without written budget review
- [ ] Property-maintenance reserve funded
Use this worksheet with The Complete Guide to Refinancing in Ontario, which explains how to complete each step and compare a refinance with a HELOC, second mortgage, straight switch or waiting until maturity.
Test the numbers in the Mortgage Refinancing Calculator, then replace all estimates with the lender’s written payout, accepted value and actual commitment terms before deciding.
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