With more than a million Canadians gearing up to renew their mortgages this year, some homeowners are racing to refinance ahead of their renewal due date.
Data from rate-comparison site Ratehub.ca reported that refinance inquiries from Canadians have doubled to 12 per cent in 2025, up from six per cent in 2024.
Ratehub.ca defines a mortgage refinance as breaking your current mortgage and starting a new one, either with the same lender or a different one.
Refinancing can also involve changing your amortization length, lowering your monthly payment or tapping into the equity you’ve built into your home — all without a prepayment penalty if done at the end of your current mortgage term.
These changes can be negotiated at renewal, which entails extending your current mortgage contract to a new term.
Experts agree that timing a refinance with your mortgage renewal can help you avoid expensive penalties associated with breaking your mortgage before its end date.
Breaking a variable-rate mortgage in the middle of your mortgage term results in a penalty equal to three months’ interest, says Penelope Graham, a mortgage expert at rate comparison site Ratehub.ca. Meanwhile, the penalty for breaking a fixed-rate mortgage early is either the greater of three months’ interest or a calculation known as the interest rate differential.
While refinancing at renewal can save you money on the penalty, there are other costs to prepare for.
First, there are legal fees, which cover administrative costs in facilitating the transaction between you and the lender, such as registering the new mortgage and conducting a title search on your property, says Graham, adding that the cost of these services is generally around $1,000.
There are some cases where your new lender might cover the legal fees for you, particularly if you have a mortgage balance greater than $200,000.
“If you stay with your existing lender, you will likely just need to pay this legal fee and registration fees for the new mortgage,” says Graham. “But if you are switching to a new lender, you may also need to pay what’s called a discharge fee.”
The mortgage discharge fee is the cost associated with transferring the mortgage from the original lender to the new lender. In some cases, Graham points out, your new lender might cover or reimburse the mortgage discharge fee.
“So, if you’re shopping around, it’s certainly worth asking if that lender is willing to do that,” says Graham. “Not all of them do, but a good chunk of them do.”
Christopher Molder, principal broker at Tridac Mortgage in Toronto, adds that the mortgage discharge fee typically ranges between $250 and $400.
If the goal of refinancing is to tap into your home’s equity, be prepared to pay an appraisal fee.
Molder explains that the appraisal process — through a physical inspection or an automated valuation model — determines the market value of your home. This figure is then used to calculate how much equity you have in the home.
Molder adds that with tax, appraisal fees can range between $300 to $1,000.
For borrowers planning to refinance at renewal, Graham recommends exploring your options as soon as possible.
“ Refinance rates can be a little bit different than straight purchase rates or renewal rates … so time is certainly a benefit to have on your side, and the sooner you kick off this process of exploring your options, the better off you’ll be.”
