Housing reference
Mortgage: Renew, Switch, Refinance, Prepay
Renewing, switching, refinancing, porting, and breaking a mortgage are different transactions. The distinction affects qualification, additional borrowing, charges, registration work, and which contract terms continue.
Opening summary
Start by identifying the transaction
A mortgage can change at the end of its term, before the term ends, or when the property changes. A renewal establishes the next mortgage term. A straight switch moves an otherwise substantially unchanged mortgage to another lender at renewal. Refinancing changes the borrowing arrangement. Portability may allow an existing mortgage to move to another property. Breaking or prepaying a closed mortgage before term-end can produce a prepayment charge.
The mortgage contract, lender approval, property, timing, and applicable regulatory rules determine the actual result.
Comparison snapshot
How common mortgage changes differ
| Event | What changes | Additional borrowing | Qualification and common consequences |
|---|---|---|---|
| Renew with the existing lender | A new term, rate, payment, and contract conditions | Not necessarily | Existing-lender process and policy; a new rate, payment, and renewal conditions |
| Straight switch at renewal | The lender changes while the balance and remaining amortization stay within the permitted lane | No equity takeout | New-lender approval still applies; minimum qualifying rate treatment is narrow; transfer, appraisal, legal, registration, or administration costs may arise |
| Refinance | The mortgage amount, amortization, lender, security, or other material terms may change | Often possible | New underwriting and applicable loan-to-value or insurance rules; possible prepayment, discharge, registration, legal, appraisal, and administration costs |
| Port a mortgage | The existing mortgage is moved to a replacement property | A top-up may be requested, subject to approval | Contract portability, property, timing, and lender approval; possible shortfall, top-up, discharge, registration, or prepayment charge |
| Break or prepay before term-end | The mortgage is paid out, transferred, or reduced beyond its privilege | Not inherent | Contract terms control; a prepayment charge and other payout or discharge costs may arise |
Contract timeline
Mortgage term and amortization are different
The mortgage term is the period covered by the current mortgage contract. It includes the contract rate, payment conditions, prepayment provisions, and other terms.
The amortization period is the estimated time required to repay the mortgage through scheduled payments. It commonly extends across several mortgage terms. Renewing the mortgage does not by itself restore the original amortization or erase the repayment history.
Term-end changes
Renewal with the existing lender
A mortgage renewal creates the next mortgage term after the current one ends. The lender may offer a different rate, term length, payment amount, and other conditions.
For federally regulated lenders, the renewal statement—or notice that the lender will not renew—must be provided at least 21 days before the end of the term. Renewal is not the same as refinancing: it can continue the remaining balance and amortization without creating additional borrowing.
Changing lenders
Straight-switch treatment is narrow
Switching moves the mortgage to a new lender, which still decides whether it will accept the borrower, property, mortgage, and security.
- OSFI prescribed minimum qualifying rate (MQR) treatment: an existing stand-alone uninsured mortgage moves between federally regulated financial institutions at renewal, with no increase to the remaining contractual amortization or loan amount apart from up to $3,000 for transaction costs. Equity takeout is not permitted. Other underwriting and due diligence continue.
- Finance Canada portfolio-insurance lane: a qualifying low-ratio mortgage originated at a federally regulated institution and previously assessed against the MQR renews with a new lender. The existing amortization schedule continues, no equity is taken out, and all other mortgage-insurance eligibility criteria continue to apply.
These are related but distinct rules. A switch can also involve appraisal, transfer, assignment, legal, registration, discharge, or administration costs. A collateral charge or other secured products tied to the property can make transfer more complex.
Restructured borrowing
Refinancing
Mortgage refinancing changes the borrowing arrangement rather than simply continuing an unchanged mortgage. It may increase the amount, release home equity, change the remaining amortization, replace the mortgage before term-end, consolidate other debt into home-secured borrowing, or move the mortgage outside a straight-switch lane.
The lender applies its current qualification, property, credit, income, debt-service, loan-to-value (LTV), and documentation requirements. Refinancing before maturity may also require the existing mortgage to be broken. Additional proceeds are additional debt secured by the home.
Moving or selling
Portability depends on the contract and lender
Selling the property usually requires the mortgage security to be discharged unless the mortgage can be ported to another property. A portable mortgage may allow the balance, contract rate, and some terms to move to a replacement property.
Portability depends on the contract, lender approval of the borrower and replacement property, permitted timing, the amount required for the replacement property, and restrictions on blending, topping up, or reducing the balance. It can sometimes reduce or avoid an early payout charge, but it does not guarantee that no charge or fee will arise.
Early repayment
Prepayment privilege, charge, and interest rate differential
A prepayment privilege is an amount the contract permits to be paid ahead of schedule without a charge. A prepayment charge may arise when a payment exceeds that privilege or when a closed mortgage is broken, transferred, or paid out before term-end.
For many closed fixed-rate mortgages, the charge is commonly based on the greater of an amount representing approximately three months of interest and an interest rate differential (IRD) amount. IRD methods vary. The contract and lender disclosure determine the actual method; OpenBook does not treat either description as a universal formula or penalty estimate.
Other costs
Registration and transaction consequences
Depending on the transaction, costs can include appraisal or valuation fees, legal or notarial fees, discharge or registration fees, lender administration charges, a new mortgage-insurance premium where applicable, and a prepayment charge under the existing contract. The amount and responsibility for each cost can vary by province or territory, lender, mortgage security, and transaction.
Official sources
Source basis
- FCAC - Mortgage terms and amortization
- FCAC - Renewing your mortgage
- FCAC - Choosing a mortgage
- FCAC - Breaking your mortgage contract
- FCAC - Mortgage prepayment penalties
- FCAC - Mortgage prepayment information code
- FCAC - Discharging a mortgage
- OSFI - Uninsured mortgage straight switches
- Department of Finance Canada - Straight switches and portfolio insurance
Use carefully
Important limitations
- This page describes general Canadian consumer and federally regulated lending contexts.
- It does not reproduce a mortgage contract, calculate a payout charge, imply lender approval, or determine eligibility.
- A straight-switch MQR treatment is not an exemption from other underwriting.
- One lender's portability, IRD, or fee practice does not establish a universal rule.
- Provincial and territorial land-registration requirements are not determined here.
This page is for educational information only and is not financial, mortgage, tax, legal, or investment advice.