Mortgage Renewal vs Refinance: What's the Difference?

Published 2025-03-01 · Updated 2025-06-01 · Reviewed against guidance from FSRA-licensed brokers

What is the difference between a mortgage renewal and a refinance?

A renewal happens when your current mortgage term ends and you negotiate new terms (rate, term length) for the remaining balance, with your current lender or a new one. A refinance means breaking or replacing your existing mortgage to change fundamental terms: increasing the amount, extending the amortization, or accessing home equity. Renewals are simpler and cheaper, and since November 2024 a straight switch to a new lender doesn’t require re-qualifying under the stress test for uninsured mortgages (insured switches were already exempt). Refinances involve legal fees, appraisals, and a full stress-test qualification.

When to renew

Renewal is the right path when:

• Your mortgage term is ending and you simply need a new rate for the next term.
• You want to switch lenders for a better rate (with no changes to the mortgage amount).
• Your financial situation hasn’t changed dramatically.

At renewal, you can typically switch from fixed to variable (or vice versa) and choose a new term length without additional costs.

When to refinance

Refinancing makes sense when:

• You want to access home equity (for renovations, debt consolidation, or investment).
• You need to extend your amortization to lower monthly payments.
• You’re consolidating high-interest debt (credit cards, lines of credit) into your mortgage.
• You want to add or remove someone from the mortgage title.

Refinancing costs typically include legal fees ($500–$1,500), an appraisal fee ($300–$500), and potentially a discharge fee from your current lender. If you refinance mid-term, you’ll also pay a prepayment penalty.

The cost comparison

Factor	Renewal	Refinance
Stress test required?	No (uninsured straight switches, post-2024)	Yes
Legal fees	Usually none	$500–$1,500
Appraisal	Usually none	$300–$500
Prepayment penalty	None (at term end)	Yes (if mid-term)
Can increase mortgage?	No	Yes (up to 80% LTV)
Timeline	1–2 weeks	3–6 weeks

Which is right for you?

If you’re simply at the end of your term and want the best rate, you want a renewal, and you should shop it. If you need to change the amount or access equity, you need a refinance. A licensed mortgage broker can help you evaluate both options and determine which saves you more in your specific situation.

Figures shown are indicative and for general information only, subject to qualification and lender approval, OAC. Not a quote. A licensed mortgage broker provides your personalized quote.

Sources

• FCAC — Renewing your mortgage
• CMHC — Refinancing your mortgage
• FSRA — Mortgage brokering