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Key Takeaways
- Renewal = same balance, new term. Refinance = new balance, full requalification, often a prepayment penalty.
- Staying with your current lender at renewal usually skips the stress test; switching lenders does not.
- Refinances let you access up to 80% of your home's appraised value.
- Breaking a fixed mortgage mid-term usually costs the greater of 3 months' interest or the IRD.
- If your term is maturing soon AND you want to pull equity, combining the two avoids the penalty.
Renewal and refinance get used interchangeably in casual conversation, but they're two very different transactions — with different costs, different qualifying rules, and different reasons to choose one over the other.
Renewal: The Same Mortgage, Continued
A renewal happens at the end of your current term (most commonly 5 years). Your principal balance stays where the amortization brought it, and you sign a new term with either your existing lender or a new one.
Key characteristics:
Refinance: A New Mortgage Mid-Term
A refinance breaks your current mortgage before maturity (or restructures it at renewal) to either pull equity out, change the amortization, or consolidate debt.
Key characteristics:
When a Renewal Is the Right Move
At renewal, getting quotes from a broker is almost always worth it — your existing lender's first offer is often 30–60 basis points higher than what's available on the open market for the same client.
When a Refinance Is the Right Move
A Hybrid Most People Don't Know About
If your term is maturing soon AND you want to pull equity, you can often combine the two transactions — refinancing at renewal avoids the prepayment penalty entirely while still letting you restructure. This is one of the most common moves we help homeowners make.
The Short Version
If you're not sure which one fits your situation, reach out — a 15-minute conversation usually makes the answer obvious.
The information provided on this page is for educational purposes. Penalty calculations, lender policies, and qualifying rules change. Contact a licensed mortgage professional for current conditions.
Have questions about mortgage renewal vs. refinance: which one do you actually need??
Call for a free, no-obligation consultation, or run the numbers first with the mortgage calculators.
(604) 780-5173About the author
Kyle Benzies, Licensed Mortgage Broker
I'm a licensed mortgage broker serving clients across British Columbia, Alberta, and Ontario. I work with a network of over 100 lenders — banks, credit unions, monoline, and alternative lenders — to find financing that fits each client's situation rather than a single institution's product shelf. Everything I publish here is written to explain how Canadian mortgage lending actually works, in plain language.
Published June 20, 2026
