Renew or Refinance Your Mortgage? How to Decide at Renewal Time

If your mortgage term ends in the next few months, you have more choices than signing the renewal letter your lender mails you. You can renew with your lender, switch to a new lender, or refinance and change the mortgage itself. Picking the right one can save you thousands, especially if you're carrying higher-interest debt.

(This guide replaces our 2023 article on market stability. Rates and rules have changed since then.)

Renewal vs refinance: what's the difference?

When renewing (or switching) makes sense

• You're happy with your amortization and don't need to borrow more.
• Your finances have changed and you'd rather not requalify. A straight switch to a better rate may still be possible without the stress test ^[3][4].
• You mainly want the best rate available for your situation. Tell your lender about competing offers, because FCAC notes you may be able to negotiate below the rate in your renewal letter ^[2].

Watch out for auto-renewal. If you do nothing, your mortgage may renew automatically, and FCAC warns you may not get the best rate and conditions. Your renewal statement will say if auto-renewal applies ^[2].

When refinancing makes sense

• You're carrying high-interest debt, such as credit cards, lines of credit or car loans, and want to roll it into a lower-rate mortgage.
• You need cash for renovations, a family need or an investment.
• Your payment is too high and you want to extend the amortization. Going beyond your original amortization is treated as a refinance, so you'll be stress-tested ^[7].
• You want to add or remove someone on title, for example after a separation.

Doing it at renewal avoids the prepayment penalty, which is often the biggest cost of refinancing ^[1].

Renewing soon? See your options with our mortgage renewal calculator or compare on our renewal page.

Worked example: renew vs refinance with $45,000 of debt (illustration only, OAC)

The Patels' home is worth $800,000. They owe $420,000 at renewal with 22 years left, plus $45,000 on credit cards and a line of credit.

The refinance frees up about $1,080 a month. The trade-off is that the $45,000 is now repaid over 22 years instead of a few. If the Patels put the savings toward prepayments, they can come out well ahead. If the cards fill back up, they'll be worse off.

Step by step: deciding at renewal

1. About 4–6 months out: check your term end date, balance and prepayment privileges. Many lenders let you renew early. Check your contract.
2. List your goals: lower rate only, or also debt payoff, cash or a lower payment?
3. Get quotes: compare your lender's offer with others. A broker can compare many lenders at once.
4. If you're refinancing: gather income documents and book the appraisal ^[8].
5. Before the deadline: sign your renewal or close the switch or refinance before the maturity date, so you don't end up auto-renewed.

Alternatives

• Blend-and-extend: change your rate before maturity without a penalty, though admin fees may apply. Your lender must explain how the blended rate is calculated ^[1].
• HELOC: flexible borrowing up to 65% of your home's value, at a variable rate ^[5]. See our HELOC page.
• Debt consolidation mortgage if debt is your main reason for refinancing.

The bottom line

If all you want is a lower rate, renew or switch. That's simpler and usually cheaper. If high-interest debt or a big expense is weighing on you, refinancing at renewal is often the lowest-cost time to restructure. Run your numbers with the debt consolidation calculator.

This article is for general information only and isn't financial, legal or tax advice. Rates, products and terms change without notice and are available on approved credit (OAC). The rate and terms you qualify for depend on your individual financial situation, including credit, income, property and loan-to-value. "Best rates" means the most suitable options available for your situation, not a guarantee of the lowest rate. Example rates and payments are for illustration only, as of October 2026, and are not an offer. 8Twelve Mortgage arranges mortgages through 65+ lenders and does not lend directly. Licensed across Canada — see our licences.

Consolidating unsecured debt into your mortgage may lower your monthly payment but can increase the total interest you pay over the amortization period.