What this calculator answers
Your home equity is the value of your home minus what you owe on it. You cannot borrow all of it: federally regulated lenders can refinance only up to 80% of the home's value, and the revolving part of a home equity line of credit (HELOC) is capped at 65%. This calculator shows how much room you have under those limits, what the new mortgage payment would be, and what it costs to refinance before your term ends.
It also separates the payment for the cash you take out from the rest of the payment, so you can see what the borrowing itself costs each month.
How the calculation works
- Room to borrow = 80% of the home value, minus your mortgage and any other debt secured on the home, minus any costs you add to the loan.
- The HELOC limit is 65% of the home value, and the HELOC plus the mortgage cannot be more than 80%.
- The penalty estimate uses the greater of three months' interest or the interest rate differential for a fixed rate, and three months' interest for a variable rate. Choose the method your lender uses or enter their quote.
- The new payment uses the new rate compounded semi-annually and the amortization you choose.
Assumptions and limits
- Regulation: the 80% and 65% limits come from OSFI Guideline B-20 and apply to federally regulated lenders. Credit unions and private lenders follow their own rules.
- Lender policy: refinance rates, penalties, legal and appraisal coverage, and maximum amortization vary by lender.
- Your assumptions: the home value, the new rate and the HELOC rate are your inputs. Defaults are examples, not quotes.
- A refinance must be qualified like a new mortgage, including income, credit, the appraisal and the stress test. This tool does not check qualification.
- Interest on money borrowed for investing can sometimes be tax-deductible. Taxes are not included here.
Common questions
How is a refinance different from a HELOC?
A refinance replaces your mortgage with a larger one that you pay down on a schedule. A HELOC is a line of credit you draw on as needed, usually interest-only, at a rate that moves with prime. A HELOC can be cheaper for short-term needs and riskier if you never pay it down.
Do I have to wait until my renewal?
No, but refinancing mid-term usually means a prepayment penalty. At renewal there is no penalty, so if your maturity date is close, waiting can save a lot. Some lenders offer a blend-and-extend that avoids the full penalty.
Why can I not borrow up to 100% of my equity?
Federal rules limit refinancing to 80% of the home value at federally regulated lenders. The 20% you cannot borrow is a buffer in case home prices fall.
Do I need to pass the stress test to refinance?
Yes, at federally regulated lenders. Taking out equity is new borrowing, so you are qualified at the higher of 5.25% or your rate plus 2%. The straight-switch exemption does not apply.
Sources
- OSFI B-20 infosheet (rules checked 2026-10-31)
- OSFI: minimum qualifying rate (rules checked 2026-10-31)
- FCAC: prepayment penalties (rules checked 2026-10-31)
- Bank of Canada, October 28, 2026 decision (rules checked 2026-10-31)