80/20 Mortgage Refinance Calculator – Canada
Here’s a comprehensive table summarizing key information about 80/20 mortgage refinancing in Canada:
| Aspect | Details |
|---|---|
| Definition | A refinancing option where you can borrow up to 80% of your home’s value |
| Maximum Borrowing Limit | 80% of the home’s appraised value |
| Minimum Equity Required | Generally, more than 20% equity in your home |
| Typical Credit Score Requirement | 500-650, depending on the lender |
| Debt Service Ratio (DSR) | Generally, GDS and TDS ratios should be under 50% each |
| Purpose | Access home equity for debt consolidation, home improvements, investments, etc. |
| Mortgage Stress Test | Required; must qualify at either 5.25% or your offered rate plus 2%, whichever is higher |
| Home Appraisal | Required to determine current property value |
| Prepayment Penalties | May apply if breaking current mortgage term early |
| Legal Fees | Typically required for new mortgage registration |
| Title Search and Insurance | May be required, especially when changing lenders |
| Discharge Fees | May apply if changing lenders |
| Interest Rates | Often higher than rates for new purchases or straight renewals |
| Term Options | Various terms available, typically 1-10 years |
| Amortization Period | Can be extended up to 30 years in some cases |
| Cash-Out Option | Available; difference between new mortgage and old balance can be taken as cash |
| Alternative Options | Home Equity Line of Credit (HELOC), second mortgage |
| HELOC Comparison | HELOC allows borrowing up to 65% of home value, often with higher interest rates |
| Refinance Frequency | No limit on number of times you can refinance |
| Processing Time | Similar to original mortgage application, typically 2-4 weeks |
| Documentation Required | Proof of income, employment, assets, debts, and tax documents |
| Impact on Credit Score | Temporary decrease due to hard credit check |
| Lender Options | Can refinance with current lender or switch to a new one |
| Blend and Extend | An alternative to full refinance, blending current and new rates |
This table provides a comprehensive overview of 80/20 mortgage refinancing in Canada, covering key aspects such as eligibility criteria, costs, alternatives, and important considerations for homeowners considering this option