Refinance vs. renew.
Refinancing your mortgage and renewing your mortgage may sound similar, but they actually mean different things. Simply put, refinancing means you’re replacing your existing mortgage with a new one that has different terms and conditions. Renewing, on the other hand, means your mortgage term is coming due and you need to negotiate a new term and interest rate for your existing mortgage.
Refinancing
Refinancing your mortgage allows you to replace your current mortgage with a new one. This can include increasing the funds and choosing different terms and conditions. While you can technically refinance your mortgage at any time, additional expenses such as prepayment penalties and closing costs may apply.
While you can technically refinance at any time, additional costs may apply — including prepayment penalties, appraisal fees, application fees, and legal expenses. It’s worth weighing those costs against the benefits before you decide.
Why would you refinance your mortgage?
- Lower interest rates: if the interest rates drop significantly, getting a new mortgage with a lower interest rate could save you money over time
- Access to cash: you can use your home’s equity for major purchases, home improvements or to consolidate debt
- Switch to a fixed-rate mortgage: if you have a variable rate, you can switch to a fixed-rate mortgage if you prefer a stable monthly payment
Keep in mind:
✔ Refinancing could involve additional costs such as appraisal fees, application fees and legal expenses
✔ This option could extend your overall mortgage commitment
Renewing
Renewing your mortgage means renegotiating the terms of your existing mortgage once your current term expires. Mortgage terms typically last one to five years and they don’t automatically renew. We recommend starting the renewal process at least three months before your term ends.
Renewal is your opportunity to reassess your financial situation and adjust your mortgage to match where you’re at in life. You can negotiate a new interest rate, change your payment frequency or switch mortgage products entirely.
What’s the difference between a mortgage term and amortization?
- Your mortgage term is a contract with your financial institution, typically one to five years and sets your interest rate, payments, and payment schedule during the term. Amortization is the total time it takes to pay off your entire mortgage, typically 25 to 30 years.
Why are there mortgage terms?
- Life is continually changing and the same goes for your financial situation. Mortgage terms give you the flexibility to adapt to these changes as your life evolves. At renewal, you can reassess your financial situation and adjust your mortgage needs as required.
Choose refinancing if:
You want to replace your existing mortgage with a new one — whether that’s to access your home equity, consolidate debt, fund renovations or lock in new terms and conditions. Refinancing can happen at any time, but prepayment penalties and additional fees may apply if you’re mid-term. Best for bigger financial moves.
Choose renewing if:
Your mortgage term is coming to an end and you simply want to negotiate a new rate and term on your existing mortgage — no replacement required. Start the conversation at least three months before your term expires. Eligible members can even renew online through Conexus digital banking. Best for staying the course, on better terms.
Crunch the numbers before you decide.
Common questions.
Here’s what people ask us the most.
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Refinancing means replacing your current mortgage with a new one that has different terms and conditions, which may include accessing additional funds. Renewing means negotiating a new term and interest rate for your existing mortgage when your current term comes to an end. The right option depends on your goals, financial situation and whether you need to access additional funds.
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Homeowners may choose to refinance to access the equity they’ve built in their home, fund renovations, consolidate higher-interest debt, or adjust their mortgage terms. Refinancing may allow you to access additional funds, but it’s important to consider the costs and whether it aligns with your financial goals.
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Refinancing may involve costs such as appraisal fees, application fees, legal expenses and potential prepayment penalties. It’s important to weigh these costs against the benefits of accessing additional funds, securing new terms or reducing borrowing costs. A Conexus Advisor can help you understand the potential costs and benefits.
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It’s a good idea to start reviewing your mortgage options several months before your renewal date. This gives you time to compare rates, explore different terms and make changes that align with your financial goals. Starting early can also help you understand your options and avoid feeling rushed when your current term ends.
Not sure which option fits?
Refinancing and renewing each serve a different purpose — and the right choice depends on where you’re at in your financial journey. We're here to help you work through the numbers, weigh your options and find the path that makes the most sense for you.
