Renewal & refinance

Refinance vs renew vs switch your mortgage in Canada (2026)

Renewing keeps your mortgage with the same lender when the term ends. Switching moves the same loan to a new lender. A refinance replaces your mortgage with a new one, which may be larger, and at a federally regulated lender it is generally capped at 80% of your home’s appraised value. Costs and qualification differ for each. The figures below are an example, not a quote.

The three paths at a glance

Renew, switch and refinance compared
Path	What changes	Mortgage stress test	Costs to ask about
Renew with your lender	Same loan, new term and rate when the term ends.	OSFI does not expect federally regulated lenders to re-apply the qualification rate to existing borrowers who renew. Each lender decides its own renewal checks.	Varies by lender. Check your contract and your renewal statement for any charges or fees.
Switch lenders (straight switch)	Same loan amount and remaining amortization with a new lender, which has to approve your application.	For a stand-alone uninsured straight switch between federally regulated lenders, OSFI no longer prescribes the minimum qualifying rate. The new lender still checks you can carry the payments.	Setup, discharge, registration and transfer fees; an appraisal if needed.
Refinance	New mortgage that may be a larger amount or a longer amortization. Can be mid-term. At a federally regulated lender: requalifying and a new valuation of the home, often an appraisal.	At federally regulated lenders, most newly underwritten uninsured mortgages are qualified at the greater of contract rate + 2% or 5.25%.	Break penalty if mid-term (varies by lender), valuation or appraisal, legal, title and other fees.

Looking at an early renewal offer instead? When the new rate takes effect is set by your lender and your agreement, not by a federal rule. Some lenders start a blended rate on your remaining balance right away; ask your lender to confirm the start date in writing. That is covered in the early-renewal section of our early renewal guide. For definitions, see refinance in the glossary.

The 80% limit on refinancing

At banks, section 418 of the Bank Act says a bank shall not make a loan on residential property for the purpose of purchasing, renovating or improving it, or refinance such a loan, if the amount together with any mortgage with an equal or prior claim would exceed 80 per cent of the value of the property at the time of the loan. It carves out loans that are insured. For borrowing against your home’s equity more generally, the Financial Consumer Agency of Canada (FCAC) says you may usually borrow up to 80% of your home’s value.

At a federally regulated lender a refinance also means requalifying and a new valuation of the home, often an appraisal. OSFI’s Guideline B-20 says the loan-to-value ratio should be recalculated on any refinancing, and that valuation can use inspections, appraisals or automated tools.

Your existing mortgage counts toward that cap. For a home valued at $750,000 the cap is $600,000; with $400,000 still owing, up to $200,000 of room remains before costs. Lenders that are not federally regulated, and other products such as a HELOC, may have different limits, depending on the lender.

Does the mortgage stress test apply?

For uninsured mortgages, OSFI’s current minimum qualifying rate is the greater of the mortgage contract rate plus 2% or 5.25%, and federally regulated lenders are expected to apply it to most newly underwritten mortgages. A refinance is a new mortgage contract, so B-20 underwriting, including the minimum qualifying rate, applies to it at a federally regulated lender (OSFI and FCAC joint letter, 25 October 2023). OSFI also says lenders are not expected to re-apply it to existing borrowers who renew, and it no longer prescribes it for a stand-alone uninsured straight switch: moving the mortgage from one federally regulated lender to another with no increase to the remaining amortization or the loan amount. The new lender still assesses whether you can carry the payments. Borrow more or extend the amortization and it is no longer a straight switch. Try your own numbers in the mortgage stress test calculator.

Worked example: refinancing up to the 80% limit

Illustrative payments at 4.50%. An example, not a quote.
Path	Mortgage	Amortization	Monthly payment
Renew or straight switch	$400,000	20 years	$2,522
Refinance to the limit, same amortization	$600,000	20 years	$3,782
Refinance to the limit, new amortization	$600,000	25 years	$3,321

An example, not a quote. Illustrative 4.50% rate, semi-annual compounding.

Refinancing to the limit adds $200,000 of borrowing before costs. Stretching to 25 years brings the payment down from $3,782 to $3,321, but it is still $799 a month more than the renewal. FCAC cautions that extending your amortization to lower payments raises the interest you pay.

A federally regulated lender would be expected to qualify an uninsured refinance at 6.50% (the example rate plus 2%, above the 5.25% floor). At that rate the $600,000, 25-year payment is $4,019 a month. That is the qualifying figure, not what you would pay.

Try your own numbers

Enter a balance, rate and amortization to see the payment. Add your lender’s written quote for the rate.

Open the live calculator with these numbers

What it costs to leave your current mortgage

An open mortgage can be broken without a prepayment penalty. With a closed mortgage you normally pay one, and FCAC says it can cost thousands of dollars. How much depends on your lender, so the example above leaves it out. FCAC lists other possible costs: administration, appraisal and reinvestment fees, and a discharge fee to remove the charge on your current mortgage and register a new one. You may also have to repay any cash back you received. See how to break a mortgage and estimate the penalty or use the prepayment penalty calculator, then ask your lender for a written payout statement.

Questions to ask before you choose

Is the term ending, or would this break a closed mortgage early?
Do you need more money, or only a different rate or lender?
Would the amortization get longer, and what does that do to total interest?
Is the mortgage insured, and would a new premium apply?
What does the written payout statement say, and which fees does the new lender pay?

A blended rate is another route when you want a new rate without a penalty; see blend and extend.

Frequently asked questions

What is the difference between refinancing and renewing a mortgage?

Renewing continues your existing loan into a new term when the current term ends. A refinance replaces the mortgage with a new one, for example to borrow more or change the amortization, and it can happen mid-term. At a federally regulated lender a refinance means requalifying and a new valuation of the home, often an appraisal. Mid-term, a break penalty can apply.

Is switching lenders the same as refinancing?

No. A straight switch moves the same loan amount, with no longer amortization, to a new lender at renewal. If the loan amount or amortization goes up, it is no longer a straight switch. The new lender still has to approve your application.

How much can I borrow when I refinance?

At a federally regulated lender the new loan is generally capped at 80% of the home’s appraised value, and your existing mortgage counts toward that cap. For a home valued at $750,000 that is $600,000 in total. Other lenders and products may have different limits, depending on the lender and the product (for example, FCAC lists a HELOC at 65% and a reverse mortgage at 55%).

Do I have to pass the mortgage stress test to refinance?

Federally regulated lenders are expected to qualify most newly underwritten uninsured mortgages at the greater of your contract rate plus 2% or 5.25%. OSFI does not expect lenders to re-apply it to existing borrowers who renew, or to stand-alone uninsured straight switches. Your lender decides how it applies to your file.

What does it cost to refinance?

It varies by lender. Ask about a prepayment penalty if you are mid-term, administration, appraisal, legal, title and discharge or registration fees, and whether a new mortgage insurance premium applies. Request a written payout statement before you commit.

Sources (read 25 October 2026)

Educational only — not a licensed brokerage and not advice. Disclaimer · How we're paid.