Refinance vs Renewal in Canada: What's the Difference?

Short answer: A renewal keeps your existing balance and gives you a new rate and term, with little or no cost or paperwork. A refinance replaces your mortgage with a new, usually larger one so you can access equity (up to 80% of your home’s value) or restructure, which means a full application, legal fees and possibly a penalty if done before your term ends.

What Is a Renewal?

• Your balance stays the same, minus what you’ve paid down
• You choose a new rate and term
• Minimal paperwork and cost
• Stay with your lender or switch
• No access to extra equity

What Is a Refinance?

• A new mortgage pays off the old one
• Access equity up to 80% of your home’s value
• Full application and qualification
• Legal fees and possible penalties
• New rate, term and possibly amortization

Side by Side

Choose Renewal When

You’re happy with your mortgage structure, don’t need equity and just want a good rate for the next term.

Choose Refinancing When

You want to consolidate high interest debt, fund renovations, restructure after a separation or life change, or significantly change your mortgage.

→ Read more: Mortgage Refinancing Guide

Things to Weigh

• Timing: refinancing before your term ends triggers a penalty. At renewal you avoid it.
• Qualification: refinancing has stricter income and credit requirements.
• Cost vs benefit: make sure the benefits clearly outweigh the costs.
• Long term plans: how does each option fit the next five to ten years?

We compare both with real numbers. Book a call.

This article is general information, not personal financial advice. Rates, rules and programs change. Talk to a licensed mortgage broker about your situation. Lacroix Mortgage Group is licensed and powered by Mortgage Connection Inc.