Can I refinance if I have equity but only pension income?

Often yes, but for less than the equity alone would suggest. A traditional refinance is limited to 80% of the appraised value and the new payment must still fit your income and debt ratios. Pension, CPP, OAS, RRIF and investment income all count, at their actual size. Where a full refinance does not fit, a smaller refinance, a secured line of credit, a reverse mortgage or an alternative lender may.

Does a high home value mean I will be approved for a refinance?

No. Equity determines the ceiling; income determines whether you reach it. A lender is planning to receive a monthly payment for years rather than to sell the property, so the payment has to be supportable on the income actually received alongside existing debts.

How much equity can I take out of my home in Ontario?

A traditional refinance with a bank is generally limited to 80% of the home's appraised value, less the existing mortgage balance and any registered liens. Equity above that level is not accessible through a standard refinance, and the resulting payment must still satisfy the lender's income and debt ratio tests.

Answers › Refinancing & Home Equity

My home has lots of equity but my income is fixed. Can I still refinance?

Q: Is a reverse mortgage a good idea for a retired homeowner?

It depends on the purpose and the time horizon. A reverse mortgage is available from age 55, requires no monthly payment, and is repaid when the home is sold or the last borrower leaves. The interest compounds and it reduces what remains to the estate, which suits some households and not others. It is a decision worth making with family involved and independent advice, not one to be sold into.

Answered by Rajiv Verma, Mortgage Broker · Updated August 2026 · About a 5 minute read

The direct answer

Equity opens the door. Income still decides how far in you get. With a bank, a refinance is limited to 80% of the appraised value and the payment has to fit your income and debt ratios — a pension or fixed income counts, but it counts at its actual size. If the payment doesn’t fit, the answer isn’t automatically no; it’s a different structure. A smaller refinance, a secured line of credit, a reverse mortgage where genuinely suitable, or an alternative lender. What I won’t do is arrange something that looks fine this year and creates pressure in three.

THE SHORT VERSION

A traditional refinance stops at 80% of appraised value — equity above that isn’t accessible this way
Pension, CPP, OAS and investment income all count — at face value
A high property value does not replace qualification
Options exist below a full refinance, and they’re often better
Borrowing less than you can is frequently the right answer on a fixed income

Why equity alone isn’t enough

A lender is not planning to sell your house. It’s planning to receive a payment every month for years. Equity is the fallback; income is the plan.

So the test is the same as it ever was: can the payment be carried alongside your other commitments, on the income you actually receive? On a fixed income the answer is often “yes, but for less than you were hoping.”

The 80% calculation is set out in full here.

The options, in the order I’d usually consider them

A smaller refinance. Obvious, and frequently right. If you need $60,000 and the payment on $60,000 fits, the fact that $180,000 of equity exists is beside the point. Borrow the need, not the maximum.

A secured line of credit. You pay interest only on what you draw. For a renovation in stages, or a buffer you may never use, this can cost far less than a lump sum you’re paying interest on from day one. It requires qualification too, and the payment can move with rates.

A reverse mortgage, where it genuinely fits. Available from 55, no monthly payment required, repaid when the home is sold or the last borrower leaves. The interest compounds and it reduces what’s left to your estate — which for some people is exactly the right trade and for others is not. This is a conversation to have with your family in the room, not a product to be sold.

An alternative or B lender. More flexible on income assessment, at a higher cost, and appropriate where there’s a clear reason and a defined end point. The tiers are explained here.

A private mortgage. Short-term, purposeful, with an exit plan. On a fixed income I am cautious about this, because the exit usually depends on income rising or the home being sold — and if neither is likely, the exit isn’t real.

The part nobody tells you.

On a fixed income, the risk isn’t the approval. It’s the year after the approval.

An income that doesn’t grow meets a payment that might. Rates move on variable products and at renewal. Property taxes rise. Insurance rises. Everything rises except the pension.

So the question I ask isn’t “does this payment fit today.” It’s “does this payment still fit if things cost ten per cent more in three years?” If the answer is no, that’s not a mortgage — it’s a deadline.

This is the situation where advising someone to borrow less, or not yet, is the actual service.

What I’d want to know first

What the money is for. A roof, a medical need, clearing high-interest debt, helping a child buy — these lead to genuinely different recommendations. Clearing 22% credit card interest with 6% mortgage debt is arithmetic. Funding ongoing shortfall with borrowed money is a warning sign, and I’d want to talk about that rather than lend into it.

Whether it’s needed at once or over time. Decides lump sum versus line of credit.

How long you intend to stay. Changes the maths on everything, especially a reverse mortgage.

What your family understands. Not a requirement, and on a fixed income these decisions affect more than one person. Adult children who find out afterwards tend to be unhappy about the process even when the decision was sound.

What to check

A realistic current value for your home, and your exact mortgage balance
All income sources — pension, CPP, OAS, RRIF, investment, rental
Every existing debt payment
Whether you’re mid-term, and what breaking would cost — the penalty page is here
Whether the need is one-off or ongoing — this matters more than any other answer

What to do next

Tell me what the money is for before you tell me how much. Half the time the best answer costs less than the one people came in asking for.

And if the honest advice is to wait, or to borrow less, you’ll get it. I would rather lose the file than arrange something that turns into a problem for you in three years.

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Related questions

Answered by Rajiv Verma, Mortgage Broker · Mortgage Architects — FSRA Brokerage Licence #12728 · Licensed in Ontario · Office 289.505.0631 · Direct 647.291.7116

General educational information only, and not financial, tax or estate advice. Reverse mortgages in particular have long-term consequences for your estate and should be discussed with your family and an independent advisor. Position stated as at August 2026.