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How Does Cash-Out Refinancing Work?

Cash-out refinancing is a relatively simple process which involves evaluating your home to see if you have built up enough equity and checking your income to see if you qualify to refinance. Lenders will allow you to refinance up to 80% LTV (loan to value) 

Once you make the decision to refinance, you will need to provide financial documentation to support the increased mortgage amount as well as pay certain fees

Below is an example of 80% LTV:

Estimated Home Value : $1,350,000

Current Mortgage Balance: $600,000

You can borrow up to: $480,000

**Every client situation is unique, but we strive to help each individual understand what their potential refinance could look like and can help explain both the process and the numbers

In addition, it is important to understand the specific steps involved in a refinance as well as understand  the additional costs involved. 

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    Is Cash-Out Refinancing Right For You?

    The difference between a cash-out refinance and a refinance is the amount that you are borrowing. With a regular refinance, your new mortgage will be for the same amount as your existing mortgage. The only change might be your mortgage rate. If your new mortgage rate is lower, you will be saving money through lower mortgage interest payments. With a cash-out refinance, you are increasing your mortgage balance amount, in addition to other possible changes such as your mortgage rate. Since you are borrowing more money, your mortgage payments might also be larger. This is always specific to your situation and we would advise you to speak with a SafeBridge Mortgage Professional to see what your options are.

    Legal Fees:

    Legal fees may vary but are the responsibility of the homeowner. You will need to work with a Real Estate Lawyer who will facilitate this on behalf of the homeowner.

    Appraisal Fees:

    An up to date value of your home is needed to help the lender assess how much money you can refinance (up to the 80% LTV) Appraisal fees range from city to city and often increase with the value of the home.

    Mortgage Registration:

    Since a mortgage refinanced means you are creating a new mortgage, you will need to pay a fee to have the new mortgage registered. **Some lenders waive this fee.

    Mortgage Discharge:

    If you happen to switch lenders during the refinancing process you will need to pay a mortgage discharge fee to the lender you are leaving. This fee ranges from lender to lender.

    Mortgage Prepayment Penalty:

    This is by far the most expensive part of the refinancing process. Depending upon which type of mortgage you are breaking, you may have to pay a substantial penalty to get out of your mortgage contract. For Variable mortgages you will need to pay 3 months interest. For a Fixed rate mortgage  you will need to pay the IRD penalty.

    The Benefits of Cash-Out Refinancing

    There are a number of key benefits of cash-out refinancing

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    1. Borrow More Money 

    Cash out refinancing is done so that you as the borrower can borrow more money, and more specifically orrow a large amount of money all at once. This is in comparison to other options that may have lower limits such as credit cards or lines of credit. 

    2. Borrow at a Lower Interest Rate 

    A cash-out refinance allows you to borrow money as a secured loan through your home so you will be paying a much lower interest  rate that a traditional credit card or other unsecured loans which typically have higher interest rates. 

    3. Borrow with Smaller Required payments 

    All mortgages are amortized over a period of 25 or 30 years. This means that your mortgage payments are spread out over a long period of time

    Why SafeBridge is the Safest Choice

    At SafeBridge our access to over 63 different lenders sets us apart. With over 20+ years in the mortgage lending space our team of mortgage professionals is qualified to help you find cottage  financing that suits your needs. 

    No two cash-out refinancing situations  are alike and we pride ourselves in customized solutions that solve your unique challenges with regards to refinancing.

    When you work with SafeBridge, our team of professionals take the time to understand your situation and come up with the perfect financing solution.  It is always in your best interest to work with a company that will not only help you secure financing but also keep in mind your holistic financial goals and make sure they are all in alignment. As a company we help thousands of clients each year find the perfect financing solution to fit their needs. When it comes to refinancing,  our team of exceptional  mortgage brokers will assist you with finding the perfect financing terms.

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    Apply Online for Refinancing With SafeBridge

    If you would like to learn more about refinancing your home, click here to speak with a SafeBridge Agent today!

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    Our Team - SafeBridge Financial Group

    Have Questions?
    We Have the Answers

    How much can I borrow with cash-out refinancing?

    The maximum LTV ratio for a cash-out refinance is 80%. Depending on your credit and income, you might not be able to qualify for a 80% LTV. If you have bad credit, the maximum allowed LTV by your lender might be lower.

    What can I use my cash-out refinancing money for?

    There are a number of things you could do with the money you pull out of your home. The most common uses are paying off debt, home improvements or renovations and investments.

    Are there penalties if I break my existing mortgage to do a cash-out refinance?

    Yes, if you want to do a cash-out refinance to pull out equity, you will need to break the terms of your existing mortgage which will mean you will be subject to a penalty payable to the lender that is holding your mortgage. If you have a Variable mortgage you will have to pay 3 months interest, whereas if you have a Fixed mortgage you may need to pay an IRD penalty which is much more expensive and is calculated by your lender.

    Double Quotes

    Over the last 20 years we’ve been successful in attracting over 60 various lenders that our clients can benefit from. SafeBridge has evolved over the years and has become a very successful company…. The education, that comes along with not just the mortgage agent side of things, but also on the insurance and the investments and the financial planning all comes together in one holistic approach.


    Double Quotes

    For several years Andre has worked in the Financial Planning and Mortgage Solutions field with Scotiabank. After experiencing success, and gaining a wide knowledge base in the banking world, he decided to leave the bank to join a Boutique Mortgage Brokerage, Safebridge Financial Group.  Andre made the change so that he could offer clients a wider variety of mortgage options and lenders.

    Andre Persaud,

    Mortgage Agent

    SafeBridge Brokers & Advisors

    Meet the Team

    At SafeBridge we believe in experiencing growth together. We want to ensure that each of our agents is successful and feels a part of the SafeBridge team. We offer customized training, lender previews, team events and even team trips to build the strong culture of inclusion and support that so many of our agents enjoy.

    We believe it is essential to hire and Partner with the right people. We are looking for the best and brightest in the Industry to join our Exclusive Group of Professionals. Our team consists of loyal top producing Agents that have demonstrated exceptional care for their clients and passion for the industry in which they serve. Our Mortgage Centered Financial Planning approach helps our team foster long lasting relationships, which brings a unique process to the mortgage business.

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