Refinancing: how much money you actually walk away with

Start with a conservative value. Apply the lender’s limit. Take off the current balance. Take off the cost of the change. What’s left is still an estimate until the appraisal and the approval are done.

• The value the lender recognizes, not the one you’re hoping for
• The balance and any other secured charges
• Penalty, discharge, legal fees, and other costs

A home estimated at $620,000, $360,000 balance. Paper equity: $260,000. The lender caps at 80% of the value it accepts; its appraisal comes in at $595,000, so $476,000 of maximum financing. Minus the balance, $116,000 remains. Penalty to break the current term: $7,200. Discharge, appraisal, notary: $2,400. Net cash: about $106,000. The kitchen and roof project priced at $120,000 does not fit, even though “paper” equity covered it twice. Before signing with the contractor, that $106,000 should have been the basis, not the $260,000.

If you refinance at the end of the term, the penalty leaves the calculation, and the gap between equity and net cash comes down to the 80% limit and the fees. A home equity line calculates its revolving portion at 65% rather than 80%, with different mechanics. And if your need is small relative to the equity, a few thousand dollars, an existing line of credit or savings often costs less than replacing the whole loan to get it.

The penalty is the big piece, but it rarely comes alone. The discharge fee from the old lender, $300 to $400. The appraisal, if the lender requires one. The notary for the new deed and its registration. Title insurance, often required by the new lender. Accrued interest between your last payment and the funding date, added to the balance you pay off. And if you refinance beyond 80% of value, it simply does not happen: the limit is firm for a refinance. One detail that costs real money: some lenders add back into the penalty the discount they gave you off the posted rate, which inflates the differential. Ask for the payout statement in writing for your target date, and read the comparison-rate line. In the example above, these secondary costs already came to $2,400; on a more complex file they exceed $4,000 without anything being wrong.

Frame the complete refinancing

FCAC — Borrowing on home equity. Reviewed August 12, 2026.