Mortgage Renewal vs Refinance vs Switching in Canada

Short answer

A lower renewal rate is not automatically the lower-cost offer after switching fees. Compare both offers on the same principal, remaining amortization and term, then inspect payment, interest, fees and end-of-term balance together.

Use the balance, rates, term, frequency and charges on written renewal offers. Confirm portability of mortgage insurance, collateral-charge costs, prepayment privileges and whether an appraisal or legal work is required.

Documents and inputs

Collect the current statement, policy declarations, illustration, valuation, offer or disclosure that controls each input. The most useful evidence is dated, identifies the jurisdiction and distinguishes cash paid now from amounts financed, deducted or merely illustrated.

• Principal balance at renewal: Use the balance on the lender renewal statement.
• Principal paid at renewal: Optional lump-sum principal payment made before comparing offers.
• Remaining amortization: Years remaining after the renewal date.
• Comparison term: Compare costs during the shorter entered term.
• Current-lender renewal rate: Nominal annual rate compounded semi-annually.
• Current-lender renewal fees: Verified fees paid because of this option.

Worked boundary example

With a 120,000 balance, ten years remaining and zero-percent offers, each payment is 1,000. A 600 switching fee makes the switch option 600 more expensive over five years even though the payments match.

Change only one input at a time when testing sensitivity. That makes it possible to explain whether a change came from rate, term, valuation, limits, fees, a deductible or a non-guaranteed assumption.

Compare like with like

Keep the same date, currency, principal or exposure, comparison horizon and benefit scope. A payment comparison is incomplete without total scheduled cost and remaining balance; an insurance comparison is incomplete without limits, deductibles, exclusions and whether a displayed value is guaranteed.

Save the base case and an adverse case. Record which result changed, by how much, and which source input caused it.

Risks and false precision

The worksheet excludes approval, penalties before maturity, variable-rate changes, blended rates, cash-back clawbacks, provincial taxes, insurance eligibility and lender-specific daily-interest or rounding methods.

Do not backsolve a desired answer by changing undocumented assumptions. Round only for display, and expect lender, insurer or contract calculations to differ because of timing, daily interest, policy terms, valuation methods or eligibility rules.

Practical next steps

1. Copy the inputs from current documents.
2. Run the documented base case.
3. Run one higher-cost or lower-benefit case.
4. Compare the result with the official quote, schedule or illustration.
5. Write down unresolved questions.
6. Ask the responsible lender, insurer, regulator, tax professional, surveyor or adviser before acting.

Questions to ask

• Does the lower rate always win?
• Does this guarantee I can switch?
• Which inputs can change before completion or renewal?
• Which fees, exclusions, policy limits or lender overlays are missing?
• What written document will control if this estimate differs?

Primary sources and review status

• Financial Consumer Agency of Canada — Renewing your mortgage
• Financial Consumer Agency of Canada — Interest on mortgages
• Financial Consumer Agency of Canada — Mortgage calculator
• Financial Consumer Agency of Canada — Breaking your mortgage contract

Primary-source, formula, fixture, boundary, content, link and responsive-browser QA was completed on 2026-10-19 by CalculatorGeek Algorithmic Team at the site owner's request. No lender, insurer, regulator or cited organization reviewed or endorsed this CalculatorGeek material. Current written contracts, policy forms, regulations, valuations and professional advice control.