Mortgage Renewal vs Refinance in Ontario: Which Is Right for You?
When your mortgage term ends in Ontario, you have two main options: renew your mortgage (extend it with the same or a new lender) or refinance it (restructure the mortgage entirely to access equity, change your amortization, or consolidate debt). Choosing the right path can save you thousands — or cost you thousands — depending on your situation and goals.
Most Canadians simply sign the renewal offer their bank sends in the mail. This is almost always a mistake. Shopping your renewal through a mortgage broker with access to 40+ lenders consistently results in better rates and terms.
What Is a Mortgage Renewal?
A mortgage renewal occurs when your current term ends and you extend your mortgage for a new term — either with your existing lender or a new one. The principal balance, amortization remaining, and property remain the same. Only the rate, term, and conditions are renegotiated.
No legal or appraisal fees if staying with the same lender
Switching lenders at renewal typically has no penalty
You can switch lenders for free at renewal and get a much better rate
Your lender's renewal offer is almost never their best offer
What Is a Mortgage Refinance?
A refinance replaces your existing mortgage with a new one — typically to access built-up home equity as cash, consolidate high-interest debt, change your amortization period, add or remove a co-borrower, switch from fixed to variable rate, fund a renovation, or implement the Smith Manoeuvre.
Can be done mid-term but usually triggers a prepayment penalty
Best executed at renewal to avoid penalties
Maximum refinance amount is 80% of your home's appraised value
Requires a new appraisal, legal fees, and lender approval
Subject to the mortgage stress test
When Should You Renew?
Renew when you're happy with your current mortgage structure, you don't need to access equity, you simply want a better rate on your remaining balance, and your amortization and payment structure are working well. Even at renewal, always compare your lender's offer against the market — a mortgage broker can do this comparison for free.
When Should You Refinance?
Refinance when you want to access equity for renovations, investments, or debt consolidation, you need to extend your amortization to reduce monthly payments, high-interest debt is costing you more than your mortgage rate, you want to implement the Smith Manoeuvre, or your financial situation has changed significantly since your last renewal.
The Hidden Cost of Auto-Renewing With Your Bank
Canadian banks routinely send renewal offers at posted rates — significantly higher than what's available through a broker. A client renewing a $400,000 mortgage at 0.5% above market rate pays approximately $2,000 more per year in unnecessary interest. Over a 5-year term, that's $10,000 left on the table.
Frequently Asked Questions
Can I switch lenders at renewal without penalty?
Yes. Switching lenders at the end of your mortgage term incurs no prepayment penalty. This is the best time to shop the market for better rates.
How early should I start shopping my mortgage renewal?
Begin 90–120 days before your renewal date. Many lenders will honour a rate hold for 90–120 days, protecting you if rates rise before your term ends.
Is refinancing worth it if there's a penalty?
Sometimes. If you can access equity to consolidate high-interest debt or if the rate savings over the remaining term exceed the penalty cost, refinancing mid-term can make financial sense. A broker can run the break-even calculation.
Can I refinance to pay off credit card debt?
Yes. Debt consolidation refinancing rolls high-interest debt into your mortgage at a much lower rate, dramatically reducing monthly cash flow strain.
What is the maximum I can refinance to in Canada?
Up to 80% of your home's current appraised value. For example, a home appraised at $800,000 can be refinanced to a maximum of $640,000.
What happens if I miss my renewal date?
Your mortgage typically converts to a short-term open mortgage at your lender's posted rate — which is much higher. Always engage a broker at least 90 days before your renewal date.
Don't Just Sign What Your Bank Sends You
Your mortgage renewal is one of the most important financial decisions you'll make every 2–5 years. Greg Kalanjian and the Choice Financial team will shop your renewal across 40+ lenders and present you with your best options — completely free of charge.
Schedule Your Free Renewal Review with Greg →
