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Refinance vs Renew Calculator
Renew, refinance, or renew and add a line of credit — the three real routes out of a renewal, each priced to deliver the same money, so the comparison actually means something.
Your mortgage
- Its cost
- $118,658
- Blended rate
- 4.74%
- Monthly
- $3,348
- To set up
- $500
Every route funds the same amount
Renewing delivers none of the $60,000 you need — so on that route it is funded unsecured at 9.95% and counted. Without that, a route that hands you nothing beats two that hand you the money, and renewing wins a comparison it never entered. That carry is $497.50 a month and $29,850 of interest over 5 years. Priced properly, renewing is the most expensive of the three here.
Blended cost of funds is what separates them: 5.19% renewing, 4.79% refinancing, 4.74% renewing with a line of credit. A higher rate on a small slice can beat a lower one on the whole balance.
A standalone line of credit stops at 65% of value — $53,000 here, $7,000 short of what you need. That gap is the single clearest reason to prefer a refinance, which reaches $176,000.
Refinancing mid-term breaks your existing mortgage. At 2.49% with 14 months left the charge is about $2,988 by the 3 months' interest, plus a discharge fee. Get the real figure from a payout statement — it is the largest single number separating these routes and lenders calculate it differently.
The renew-plus-line-of-credit route is the one nobody is offered, because your existing lender has no reason to mention it and a new one would rather refinance you. A broker can price all three against your actual file.
Talk to a brokerThe three routes over 5 years
Payments made, plus everything still owed at the end, plus setup costs, less what you owed at the start and less the money each route actually put in your hands. That last subtraction is what makes them comparable.
Nothing to requalify for and no penalty, but it delivers none of the money — anything you need has to come from somewhere else.
One payment at one rate, reaching furthest up the value of the home — at the cost of a full requalification, a penalty if you are mid-term, and giving up the rate you have.
Two payments, but your mortgage rate is untouched and the line can be paid down or redrawn at will. It stops at a lower ceiling than a refinance.
What each route can actually reach
A line of credit stops at 65% of your home's value — $53,000 here, $7,000 short of what you need. That gap is usually the deciding factor, before any rate is compared.
A renewal changes your rate, not the amount you owe. Anything a route cannot reach is funded unsecured at 9.95% in the costs above — which is what makes the three comparable at all.
Who is ahead, year by year
Renew + line of credit is ahead at every point out to ten years on these figures. A line of credit carried interest-only never reduces its balance, so a refinance can catch up given long enough — here it does not.
What separates them
- Cheapest over 5 yearsTwo payments, but your mortgage rate is untouched and the line can be paid down or redrawn at will. It stops at a lower ceiling than a refinance.
- Renew + line of credit
- Ahead of the dearest byRenew is the most expensive of the three here
- $11,625
- What the winning route leaves you carrying$480,000 of mortgage, $53,000 secured against the home and $7,000 unsecured at 9.95%
- $540,000
What you would pay each month
- Renew$3,048.83 mortgage plus $497.50 on the rest
- $3,546.33
- RefinanceA single mortgage payment
- $3,518.76
- Renew + line of credit$3,048.83 mortgage plus $298.75 on the rest
- $3,347.58
What it costs to set up
- RenewAdministrative only
- $200
- Refinance$2,988 penalty, $350 discharge and $1,500 of legals
- $4,838
- Renew + line of creditRenewal admin plus registering the line behind your mortgage
- $500
The penalty, if you refinance mid-term
- Rate you are paying
- 2.49%
- Months left in the term
- 14
- Three months of interest
- $2,988
- Interest differentialCharged instead of the three months when it is larger
- $0
- Charge to break3 months' interest — get the real figure from a payout statement
- $2,988
Before you choose
The penalty is the largest single number separating these routes and the one most often guessed at. Get it properly before deciding.
A planning estimate, not an approval. Refinance pricing, line-of-credit terms, switch eligibility and what your lender will actually offer at renewal all vary and are not on any rate sheet — confirm the specifics before committing to a route. Every route is priced to fund the same amount; where one cannot reach it the shortfall is carried unsecured at the rate you entered and counted, because comparing a route that delivers nothing against two that deliver the money is not a comparison. Cost means payments made plus everything still owed at the end plus setup costs, less the balance you started with and less the money the route delivered. A line of credit is modelled interest-only at a monthly-compounding rate, which is the usual structure — it reduces no principal unless you choose to pay it down, and it is variable where your mortgage rate is not. Any mid-term penalty is estimated from the rate you entered as your current one; only a payout statement from your lender is authoritative. Prepayment privileges, switch eligibility at renewal, and the flexibility to repay and redraw a line of credit are not priced here and can outweigh the differences that are.
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What this calculator does
Most people coming up to a renewal think there are two choices: renew, or refinance. There is a third, and it is very often the cheapest — renew the mortgage exactly as it stands and add a line of credit alongside it for whatever money you need.
This page prices all three over five years. The thing that makes the comparison work is that every route funds the same amount. A renewal on its own delivers nothing; a line of credit stops at 65% of your home’s value. Wherever a route falls short, the gap is funded unsecured and counted, because that is what actually happens.
Without that, the comparison is meaningless in a specific and misleading way: the route that hands you no money looks cheapest, every time.
- Renew, refinance, or renew and add a line of credit — priced side by side
- Every route funds the same amount, with any shortfall costed honestly
- Blended cost of funds for each — the number that actually decides it
- The penalty on a mid-term refinance, priced off the rate you actually pay
- Cost year by year, since an interest-only line and an amortizing mortgage diverge
The comparison only works if every route delivers the same thing
This is the whole point and it is worth being blunt about. If you need $60,000, then renewing does not solve your problem — it changes your rate and leaves you exactly $60,000 short. Comparing that against a refinance which hands you the money, and charging the refinance for the money while giving the renewal no credit for going without it, is not a comparison at all.
On the default figures, doing it that way makes renewing look $93,714 cheaper than refinancing. It is a completely spurious result, and it is what a well-known version of this calculator reports for every purpose except debt consolidation.
Here, if you renew you still need the $60,000, so it is funded unsecured at the rate you specify and that cost is carried on the renewal route. Once all three routes deliver the same money, the ranking inverts: renewing becomes the most expensive of the three, not the cheapest.
- A renewal changes your rate, not the amount you owe
- If you need money, renewing leaves you needing it still
- The shortfall is funded unsecured and priced on that route
- Without this, renewing wins every comparison for no real reason
- With it, renewing is the most expensive of the three on the default figures
Blended cost of funds is what decides it
Headline rates stop being useful the moment two routes leave you carrying different mixes of debt. What matters is the weighted average rate across everything a route leaves on your books.
On the defaults: renewing leaves $480,000 at 4.59% plus $60,000 unsecured at 9.95%, blending to 5.19%. Refinancing puts everything into one mortgage at 4.79%. Renewing and adding a line of credit leaves $480,000 at 4.59%, $53,000 at 5.45% and a $7,000 unsecured remainder — blending to 4.74%.
The line-of-credit route wins on a rate that is, on its face, higher than the refinance rate. That is the whole argument for it: a higher rate on a small slice beats a slightly higher rate on the entire balance. Refinancing reprices $480,000 you were already borrowing perfectly happily in order to get at $60,000 you were not.
- Renew and fund unsecured: 5.19% blended
- Refinance everything into one mortgage: 4.79%
- Renew and add a line of credit: 4.74%
- The winning route has the highest headline rate on the new money
- Refinancing reprices the whole balance to reach a fraction of it
The ceilings decide more than the rates
Before any rate matters, each route has a limit on what it can reach. A refinance goes to 80% of your home’s value. A standalone line of credit stops at 65%. Those are different ceilings and the amount you need can rule a route out entirely.
On the defaults, an $820,000 home with $480,000 owing leaves $176,000 of room under a refinance and $53,000 under a line of credit. If you need $60,000, the line of credit is $7,000 short — so that route funds $53,000 and the remainder goes unsecured, which is exactly how it is priced here.
That gap is the single clearest reason to prefer a refinance, and it is worth checking before falling in love with a blended rate. As the amount you need rises past the 65% ceiling, the line-of-credit route degrades steadily and the refinance takes over.
- Refinance reaches 80% of value; a standalone line of credit reaches 65%
- On the defaults that is $176,000 against $53,000
- A $60,000 need leaves the line of credit $7,000 short
- The shortfall is funded unsecured and priced, not ignored
- The more you need, the more the refinance route wins on reach alone
Mid-term, the penalty is priced off the rate you have
Refinancing before your term ends means breaking the mortgage you are in. That charge is calculated from the rate you are actually paying, not from the rate you are being offered to renew at — and the difference is not small.
On the defaults, a 2.49% mortgage with 14 months left costs $2,988 to break, being three months of interest. Substitute the 4.59% renewal offer as though it were the contract rate and you get $5,508 instead: an 84% overstatement, pushing the answer away from refinancing for no reason.
The wider point is that a low legacy rate makes the interest differential zero in a higher-rate market, so the charge collapses to three months of interest and refinancing is far cheaper to reach than people assume. The reverse is also true. Either way, the only number that counts is the one on a payout statement from your lender, and lenders calculate this very differently from one another.
- The penalty is priced off your contract rate, not the renewal offer
- On the defaults: $2,988, not the $5,508 the wrong rate produces
- A low legacy rate in a higher-rate market means no interest differential
- The charge then collapses to three months of interest
- Get the real figure from a payout statement — methods vary by lender
At renewal with no money needed, this is simple
If your term is ending and you do not need any funds, there is nothing here to decide. Renewing wins, because refinance rates sit above renewal rates and there is nothing a refinance would change.
What is worth knowing is that at renewal you are free. There is no penalty to move to another lender at the same balance and amortization, and shopping that renewal is usually worth more than anything else on this page. The rate comparison calculator is the better tool for that.
Refinancing exists to change the amount you owe or the structure of it. If neither needs changing, it is a solution to a problem you do not have.
- No money needed at renewal means renewing, almost always
- Refinance rates are priced above renewal rates
- Moving lenders at renewal carries no penalty
- Shop the renewal offer — that is where the money is
- Refinancing changes the amount or the structure, nothing else
What the numbers cannot tell you
A line of credit can be paid down and redrawn at will. A refinance cannot — once the money is inside the mortgage, getting it back out means another refinance. For anyone whose need is temporary, or whose repayment is lumpy, that flexibility is worth real money this page cannot put a figure on.
Pulling the other way: two payments instead of one, a variable rate that moves with the Bank of Canada while your mortgage rate does not, and a line of credit that is interest-only by default and so never reduces itself unless you make it. That last point is why the year-by-year table is here — a refinance amortizes the money away while a line of credit does not, so given long enough the refinance catches up.
And none of this models whether your lender will actually let you switch at renewal without a full application, or what a line of credit will be priced at once someone has looked at your file.
- A line of credit can be repaid and redrawn; a refinance cannot
- Two payments and a variable rate against one payment and one fixed rate
- Interest-only means the balance never falls unless you make it
- Given long enough, an amortizing refinance catches up
- Switch eligibility and real line-of-credit pricing are not modelled
Using your results well
Start with the ceilings. If what you need is beyond 65% of your home’s value, the line-of-credit route is compromised before rates enter the picture, and the comparison is really between refinancing and renewing while funding the rest another way.
Then look at the blended cost of funds rather than the headline rates. A route can carry a higher rate on the new money and still cost less overall, and that is the case the whole page is built to surface.
If you are mid-term, get a payout statement before anything else. The penalty is the largest single number separating these routes and it is the one most often guessed at. And if the answer comes out close, choose on flexibility rather than on a few hundred dollars of modelled difference.
- Check the ceilings before comparing any rates
- Decide on blended cost of funds, not headline rates
- Get a real payout statement if you are mid-term
- Where costs are close, choose on flexibility
- Confirm switch eligibility and real line-of-credit pricing with a broker
Common questions
What is the difference between renewing and refinancing?
Renewing signs a new term on the balance you already have, at a new rate, with no new money and usually no full application. Refinancing replaces the mortgage entirely — a new amount, a new rate, a full requalification, and a penalty if you are mid-term. A renewal changes your rate; a refinance changes what you owe.
Is renewing always cheaper than refinancing?
Only if you do not need any money. With no funds required, renewing wins almost every time, because refinance rates sit above renewal rates and a mid-term refinance also carries a penalty. Once you genuinely need money out, renewing leaves you needing it still — and funding that unsecured makes renewing the most expensive of the three routes on the default figures here.
Can I renew and add a line of credit instead of refinancing?
Yes, and it is often the cheapest route — it is also the one nobody mentions. Your mortgage renews untouched at its own rate and the new money sits in a separate line of credit. On the figures here that blends to 4.74% against 4.79% for a refinance, despite the line of credit carrying a higher rate, because it only applies to a small slice rather than the whole balance.
How much can I access through each route?
A refinance reaches 80% of your home’s value; a standalone line of credit reaches about 65%. On an $820,000 home with $480,000 owing that is $176,000 against $53,000. If you need more than the lower ceiling, the line-of-credit route cannot cover it on its own, and that is usually the deciding factor rather than the rate.
What does it cost to refinance before my term ends?
A prepayment charge, calculated from the rate you are currently paying rather than the rate you are being offered. On a 2.49% mortgage with 14 months left, that is about $2,988 — three months of interest, because a low legacy rate in a higher-rate market produces no interest differential. Lenders calculate this very differently, so get a payout statement rather than an estimate.
Does it matter what I need the money for?
Not to the arithmetic, but it changes what the unsecured rate should be. If you are consolidating debt you already carry, use the rate you are actually paying on it — often near 20% on a card. If you would be arranging new borrowing, an unsecured line of credit is nearer 10%. That rate drives how expensive the renewal route looks, so it is worth entering honestly.
Should I just take the cheapest route?
Not automatically. A line of credit can be repaid and redrawn whenever you like; money folded into a refinance can only come back out through another refinance. If your need is temporary or your repayment will be lumpy, that flexibility is worth more than a small cost difference. Where the routes come out close, decide on that rather than on the modelled dollars.
Next step
There is a third option, and nobody offers it to you.
Your existing lender has no reason to mention renewing plus a line of credit, and a new lender would rather refinance you. It is very often the cheapest of the three, and it is the one you have to ask for. Mortgage Directory lists licensed brokers across Canada — placement is never sold, and an enquiry goes to one broker only.