Definition
Mortgage refinancing is the operation of modifying the conditions of your existing mortgage — to increase the balance (equity take-out), change amortization, adjust the rate, or switch lenders. It differs from renewal, which is the routine continuation of the contract at maturity without structural changes.
Since OSFI B-20 rules of 2016, the maximum LTV at refinancing is capped at 80% — you can only extract equity down to leaving at least 20% of the value as down payment. A refinance almost always triggers the mortgage stress test (qualifying at contractual rate + 2% or 5.25%, whichever is higher).
Costs to anticipate: breakage penalty if you refinance mid-term (IRD for fixed, 3 months interest for variable), notary fees to draft and register the new deed (CA$1,200-2,500 in Québec), appraisal fees (CA$300-500), and potential origination fees. A profitability analysis is essential before proceeding.