When you need extra money and looking for ways to tap into the existing equity in your homerefinancing your mortgage in this low-rate environment may seem like a good idea. However, while refinancing seems like an attractive option, there is one expensive cost lurking beneath the surface – prepayment penalties.  

Loan prepayment penalty

So, what is a prepayment penalty? This is a fee that a lender will charge you for breaking your mortgage before the term ends. And yes, sometimes, refinancing your mortgage with the same lender still counts as breaking your mortgage. So how much could this cost you?

Well, it can cost tens of thousands of dollars depending on interest rates, the number of years left in your term, and other factors. Because prepayment penalties can be costly, we recommend that you contact your bank or existing mortgage lender to inquire about your prepayment penalty. The bottom line is that the affordable rates you thought you could take advantage of don’t seem so affordable anymore. 

Are there other options? Increasingly, Canadians are looking towards home equity loans as an alternative to utilize the existing equity in their homes and obtain funds. A Tribecca home equity loan is a lump sum given to homeowners secured against their property to be used for any purpose. This financial tool has great flexibility and allows you to obtain funds quickly and easily. Whether you need a few thousand or hundreds of thousands of dollars, we provide home equity loans to help you reach your goals.  

Benefits of a Home Equity Loan: 

Avoid Prepayment Penalties

When you refinance your mortgage, you may face hefty penalties for breaking your mortgage contract. With a home equity loan, you are able to keep your first mortgage in place while still taking advantage of the equity in your home and obtaining the funds you require. That means you don’t pay a penalty for breaking your mortgage. Even though you may pay higher rates on a home equity loan, you’ll still save money by avoiding large prepayment penalties. 


At Tribecca Finance, we can offer the lowest home equity loan rates in Ontario with flexible terms and a variety of payment options. Our home equity loans can be customized to meet your specific requirements, meaning we can match the term to your existing mortgage, provide an open home loan, and more. Additionally, we offer amortized principal and interest payments, interest-only payments, or a custom payment plan with zero payments for up to 12 months. 

Quicker Process

Refinancing your mortgage can be a long, drawn-out process that takes weeks to find out if you’re approved. At Tribecca, we provide same-day approvals and funds within days. 

No Mortgage Stress Tests

Unlike a refinance, with a home equity loan, you are not required to re-qualify with the more stringent mortgage stress test guidelines. These require homeowners to qualify at a rate 2% higher than the contractual rate, which may be difficult for some people. Home equity loans are not qualified this way and allow you to tap into the equity in your home that you’ve worked hard to build.

What can you do with a home equity loan? Anything! There is no restriction on what you can use the funds for. People commonly use these funds to: 
  • Consolidate debts 

  • Home renovations 

  • Invest in your business

  • Purchase an investment property 

  • Purchase a vacation property 

  • Pay off an existing 2nd or 3rd mortgage 

  • Pay for a wedding 

  • Invest in their child’s education 

  • And many more

So, when faced with the choice of refinancing your mortgage or choosing a home equity loan, it’s important that you crunch the numbers to see which option makes the most sense for you.

If you want to learn more about home equity loans, call us at (416) 225-6900 and a Tribecca advisor will be happy to answer your questions.