Can I refinance before selling?
Want to refinance before you sell — and keep more cash at closing? Here’s the straight answer.
Short answer: Yes — but only when it actually helps you
You can refinance before selling. Lenders will let you replace your current mortgage with a new one. That new mortgage becomes the lien on the property. But just because you can doesn’t mean you should.
Refinancing before a sale makes sense in three situations:
- You lower your rate and save more in net proceeds than the refinance costs.
- You need cash (cash-out refinance) to renovate, stage, or pay off higher-cost debt to improve sale value.
- You’re fixing title issues or consolidating multiple liens so the sale can close cleanly.
When refinancing before selling is a bad idea:
- You plan to list immediately. Closing a refinance and then selling adds duplicate closing costs and usually wipes out any short-term savings.
- Your loan has a prepayment penalty that eats gains.
- You have junior liens that won’t subordinate or get released easily.
Mortgages, liens, and what actually changes at closing
A refinance replaces the current mortgage lien with a new mortgage. If you refinance and pay off the original loan, the lender records a discharge of the old lien and registers the new lien. For title to transfer cleanly at sale, you must ensure all liens can be paid off or released at closing.
Common lien issues to watch:
- Second mortgages and HELOCs: They may require payoff or subordination. A sale usually pays them off from proceeds.
- Tax liens or judgment liens: These must be cleared before transfer.
- Municipal charges: Unpaid local charges can delay closing.
Quick steps to decide right now
- Get a payoff estimate from your current lender and quotes from two refinance lenders.
- Calculate break-even (refinance costs vs. monthly savings). If you plan to sell within the break-even period, refinance likely loses money.
- Check for prepayment penalties and lien release timelines.
- Talk to your realtor and closing lawyer to confirm sale timing and title requirements.
Actionable examples
- Selling in 12+ months and can cut rate by 1% — likely refinance.
- Selling in 3 months and need $30k for repairs — consider a short-term bridge loan or a cash-out refinance only if payoff and fees make sense.
Bottom line
Yes, you can refinance before selling, but the right move depends on timing, costs, liens, and the sale plan. Don’t guess. Use data.
If you want a no-fluff, numbers-first opinion on whether a refinance helps your sale, contact Tony Sousa. He’ll run the numbers with your lender, check lien status, and map the fastest clean-close strategy so you keep more cash at sale.
Contact Tony Sousa: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
Get a quick refinance vs. sell worksheet and a free consult — call or email now.
