Should You Refinance or Renew?

When it comes to managing your mortgage, you’ll likely come across two key terms: renewing and refinancing. While they might sound similar, they serve very different purposes. Understanding the difference can help you make smarter decisions about your mortgage and your financial future. 

Let’s break it down.

What is a mortgage renewal?

A mortgage renewal happens when your current mortgage term ends (typically 1 to 5 years), and you need to sign a new agreement—either with your current lender or a new one. Most mortgages in Canada aren’t paid off by the end of the term, so renewals are a regular part of homeownership.

When you renew, you can:

• Negotiate a new interest rate
• Choose a different term length
• Adjust payment frequency
• Switch to a different lender

Your remaining mortgage balance doesn’t change—you’re continuing to pay off the same amount you owed at the end of your last term.

What is mortgage refinancing?

Refinancing your mortgage means replacing your existing mortgage with a new one, often with a new lender, new terms, and a different loan amount. Unlike renewing, you can refinance anytime, not just at the end of your mortgage term.

People typically refinance to:

• Access home equity (often for renovations, debt consolidation, or big expenses)
• Secure a lower interest rate
• Change the mortgage type or term
• Add or remove someone from the mortgage

Key differences at a glance.

Should you refinance or renew?

Here are a few questions to ask yourself:

• Is your term coming to an end? → You’re likely renewing unless you want something more out of your mortgage.
• Do you need extra cash for renovations or other goals? → Refinancing may help.
• Do you want to lower your interest rate or change lenders? → Either might work, depending on your timing.

Before you make a move or sign anything, talk to a mortgage broker like myself. I can help you weigh the costs (like potential prepayment penalties with refinancing) and benefits.

Mortgage Okanagan is here to help.

Both mortgage renewal and refinancing are opportunities to improve your financial situation—but they’re not the same. Renewing keeps things simple and focused on continuing your payments. Refinancing gives you flexibility and access to your home’s value, but can come with more complexity.

Need help deciding what’s right for you? Let’s chat about your options and find the best path forward. Give me a call at 250-826-3111, apply on my website or contact me through my online contact form to start the process today.