Should I Renew or Refinance My Mortgage? – What Canadian Homeowners Need to Know

John Lee - Arise Mortgage
12 minutes ago
2 min read

As a Canadian homeowner, managing your mortgage isn’t a one-time decision—it’s an ongoing process. One of the most common questions that comes up as your mortgage term nears its end is: Should I renew or refinance my mortgage?

Let’s explore the difference between the two, when each option makes sense, and how to decide what’s best for you.

What’s the Difference?

✅ Mortgage Renewal

When your mortgage term ends—typically every 1 to 5 years—you’ll need to renew it. This simply means signing a new agreement with your lender, possibly with a new rate or term. If you're in good standing, your lender will send you a renewal offer, usually 30 days before the term ends.

🔄 Mortgage Refinancing

Refinancing means replacing your current mortgage with a new one—either with your current lender or a different one. You can refinance to access home equity, get a lower interest rate, consolidate debt, or change your amortization period.

When to Renew

Renewing is typically the simplest and fastest option, especially if:

You're happy with your lender.
You don’t need to borrow additional funds.
You want to avoid prepayment penalties.

However, don’t just accept the first offer. Lenders often don’t offer their lowest rate upfront—especially to existing customers. Consider negotiating or exploring options through a mortgage broker.

When to Refinance

Refinancing gives you more control and flexibility. Consider it if:

Interest rates have dropped since you signed your current mortgage.
You want to access your home’s equity for renovations, debt consolidation, or investments.
You need to restructure your mortgage to fit life changes (e.g., new job, family planning).
You want to switch from a variable to a fixed rate—or vice versa.

Keep in mind that refinancing before your term ends may come with a prepayment penalty, but the long-term savings could outweigh the cost.

How to Decide

Ask yourself:

Are you getting the best possible rate?
Do you need to free up cash or reduce monthly payments?
Has your financial situation changed since your last mortgage?
What are your long-term financial goals?

If you’re simply continuing your mortgage with similar terms, renewal is likely your best move. But if you’re looking to save more or restructure your finances, refinancing might be the smarter choice.

Get Professional Advice

Working with a Canadian mortgage broker can help you compare options, avoid penalties, and find the best fit—whether you're renewing or refinancing. It’s about more than just rates—it’s about strategy.

Need help deciding? We’re here to guide you through it. Contact us today or DM us for expert mortgage advice tailored to your goals.