Mortgage Renewal vs Switch vs Refinance: Which Route Fits Your Situation?
At renewal, you can stay with your lender, move your mortgage to another lender or change the borrowing arrangement through refinancing. The right choice depends on what you need to change and what it will cost.
A lower rate matters, but so do fees, repayment time and the conditions attached to the mortgage. Start by deciding whether you want a new term, a different lender or access to more money.
This guide explains the differences so you can compare offers on the same basis.
In this guide
Renew, switch or refinance: what is the difference?
These options can overlap. Moving to a new lender while borrowing more money is usually a refinance, rather than a straightforward transfer. Staying with your lender does not automatically make a larger loan a simple renewal.
Stay with your current lender
A renewal sets a new term, rate and payment arrangement for the remaining mortgage. It may involve less paperwork than changing lenders, but the first offer may not be the most competitive one available. Review the rate and contract terms before accepting.
Move to another lender
A switch transfers your outstanding mortgage to a new lender. It can give you access to different rates or contract features. The new lender must approve the application, and transfer costs may apply even when the switch takes place at maturity.
Change the borrowing arrangement
Refinancing may let you borrow additional money, consolidate debts or change your amortization. It requires a lending assessment and may involve appraisal, legal and registration costs. If it takes place before your term ends, a prepayment penalty may also apply.
For a starting point, explore Powerhaus’s mortgage renewal options and compare them with the changes you actually need.
Does switching require a stress test?
Some uninsured mortgage switches at renewal qualify for an exception to the federal minimum qualifying rate. OSFI’s minimum qualifying rate guidance covers eligible straight switches between federally regulated lenders where the loan amount and remaining contractual amortization do not increase.
This exception does not remove the need for approval. The receiving lender still assesses your application under its lending policies. Changes to your income, debts or property can affect the decision.
If you want extra funds or a longer repayment period, confirm how the lender will classify the transaction. Do not assume the same qualifying rules apply to every transfer or refinance.
What changes if you need more money?
Home equity is the property’s value minus the debts secured against it. Having equity does not mean you can borrow all of it. A lender considers the property value, existing secured debt, your finances and its lending limits.
The FCAC guide to borrowing against home equity explains the options and associated costs. When comparing a refinance, work out how much cash would remain after paying existing debts and closing expenses.
Longer repayment
Extending amortization can reduce the regular payment. It can also increase total interest because the debt is repaid over more years. Your mortgage term and amortization are different: the term is the contract period; amortization is the estimated repayment period.
Debt consolidation
Moving other debts into a mortgage may reduce their interest rate, but repayment could take much longer. The debt also becomes secured against your home. Compare the total cost and a repayment plan before proceeding.
Powerhaus’s mortgage refinancing service can help you review the proposed loan amount, payment and repayment period together.
Compare the cost of moving the mortgage
Switching when your term ends can avoid the penalty that may apply when ending a closed mortgage early. However, discharge, registration, legal or appraisal costs may still apply. A lender may cover certain transfer expenses, subject to conditions.
If you are considering an early move, obtain a payout statement for the expected closing date. The FCAC guide to breaking a mortgage contract explains potential penalties, other fees and repayment of cash-back incentives.
Also check how your mortgage is registered. A collateral charge or other debts secured under the same registration can affect the transfer process. Confirm which balances must be repaid and whether the receiving lender can accept the proposed transfer.
Use the same assumptions for every offer
Compare the same starting balance, remaining amortization, payment frequency and effective date. Otherwise, a smaller payment may simply reflect a longer repayment period.
Look at the interest cost, upfront fees and expected balance at the end of the proposed term. Then review prepayment privileges, restrictions on extra payments, portability and the way early-exit penalties are calculated.
A mortgage should also fit your plans. If a move, sale or large lump-sum payment is likely, those contract features deserve attention alongside the rate. Powerhaus’s mortgage transfer service provides a place to discuss the requirements for changing lenders.
Start before your current term ends
The FCAC mortgage renewal guide recommends shopping around a few months before renewal. This leaves time to negotiate, supply documents and arrange a transfer if you choose one.
Have your mortgage statement, renewal offer, income documents and details of other secured borrowing ready. Explain any extra funds you need, planned move or change in income at the start of the discussion.
Before closing, confirm the final approval, outstanding conditions and first payment date. Continue making your existing payments until you receive instructions confirming the change.
Mortgage renewal and refinancing FAQs
Do I have to renew with my current lender?
No. You can compare other lenders and apply to transfer the mortgage. The receiving lender must approve your application, and you need enough time to complete the transfer.
Can I take out extra cash through a straight switch?
Extra cash for personal use generally makes the transaction a refinance. Do not assume it qualifies for the uninsured straight-switch stress-test exception. Eligible transaction costs are treated separately under the applicable rules.
Can I extend my amortization and still use the straight-switch exception?
The OSFI exception requires the remaining contractual amortization not to increase. If you want a longer repayment period, the lender must assess the request under the rules that apply to that transaction.
Will the new lender pay all switching costs?
Not necessarily. Some offers cover specified expenses, while others have limits or conditions. Review the written offer and confirm what you would pay before choosing a lender.
Does renewal restart my amortization?
A routine renewal does not automatically restart the original repayment period. Your remaining amortization normally continues. A request to extend it is a separate change that needs lender approval.
Choose the mortgage around your plans
Bring your renewal offer to Powerhaus. Review what you want to change, compare the available terms and understand the costs before committing to your next mortgage.