Car Loan Refinancing in Ontario: How to Remove a Co-Signer or Reduce Payments to Boost Your Mortgage Approval

Vroom, vroom - until your mortgage application comes to a screeching halt!

If you’re buying a home in Ontario but your mortgage approval is blocked by a car loan (whether it’s a vehicle you own or one you co-signed for) you might think your only options are to pay it off or give it up.

But there’s a new way forward. A specialized vehicle loan refinancing service, available only through brokers like VeloMortgage.ca, can remove a co-signer or restructure your payments in just days; and that can mean the difference between a declined mortgage and the keys to your new home.

Why Car Loans Can Block Your Mortgage Approval

Mortgage lenders look at something called your debt service ratios; basically, how much of your income is already spoken for by other debts.

Here’s the problem:

• A $1,000 monthly car payment can cut your mortgage approval by $150,000–$200,000 or more.

• It doesn’t matter if you’ve never missed a payment or if you don’t even drive the car (in the case of cosigning) - lenders count that full amount against you.

• If you co-signed for someone else, you’re still 100% responsible in the bank’s eyes.

The result? That car loan could be the one thing standing between you and your dream home.

Cosigning for a car loan sounds like a good friend/sibling thing to do, and you’re not paying for it anyway so who cares right? Unfortunately, you’re on the hook for the payments - and hurting your qualification according to the banks.

Remove a Co-Signer Through Vehicle Loan Refinancing

Let’s say you co-signed for your sibling’s car loan. They’ve been paying it perfectly for years, but when you apply for a mortgage, that $1,000 monthly payment still appears on your credit.

With the right vehicle loan refinancing, we can:

• Qualify the primary driver on their own

• Transfer the loan entirely into their name

• Remove it from your credit report completely

That single change can instantly improve your debt ratios and boost your home financing options, without you having to sell or payout a car you don’t even drive.

Reduce Car Loan Payments to Increase Mortgage Approval

Even if the car is yours, high payments can still crush your mortgage approval amount.

Example: You have a $1,200 monthly SUV payment. By refinancing and extending the term, the payment could drop to $650. That’s $550 more each month in your budget - enough to increase your mortgage approval by $75,000–$100,000 or more.

The best part? This can often be done in just a few days, so you’re not stuck waiting weeks while the perfect home slips away.

Why This Option Isn’t Available at Your Bank

Most banks only offer car loan refinancing to their existing clients - and even then, they won’t touch co-signer removals or creative payment restructuring.

This service works differently:

• Exclusive to specialized brokers like VeloMortgage.ca

• Fast turnaround - often within 2–3 business days

• Flexible approvals for both co-signer removal and payment reduction

If you’ve been told “there’s nothing you can do” about a car loan affecting your mortgage, that’s just because you’ve been talking to the wrong people.

Frequently Asked Questions About Vehicle Loan Refinancing in Ontario

1. Can refinancing my car loan improve my mortgage approval?
Yes. Lowering or removing a car payment improves your debt ratios, which can significantly increase the mortgage amount you qualify for.

2. How fast can a vehicle loan be refinanced?
In most cases, 2–5 business days from application to completion.

3. Can I refinance a co-signed car loan without the other person’s consent?
No, the primary borrower will need to qualify to carry the loan on their own.

4. What if my car is almost paid off - is refinancing still worth it?
If you’re within a few months of paying it off, it may be better to wait. But if you’re still years out and your mortgage approval is suffering, it can make a big difference.

The Bottom Line

Vehicle loan refinancing isn’t just about lowering car payments, it’s about unlocking your full mortgage potential.

Whether you’re stuck as a co-signer or paying way too much for your own vehicle, this is an option worth exploring before you start house hunting.

At VeloMortgage.ca, we can connect you to this service and get answers in days. If a car loan is holding back your mortgage approval, let’s fix it before it costs you your dream home.

Let’s not let it get to that. Let’s chat about car refinancing to your dream home today.

Jeff Dinsmore

Mortgage Broker

FSRA # 10315

TMG - The Mortgage Group