Renewal vs. Refinance: What's the Difference?

A mortgage renewal happens at the end of your term (commonly 1–5 years) when your current agreement expires, but your amortization continues. You can renew with your existing lender or move to a new one — shopping around at renewal is one of the most underused ways to save money.

A refinance is a new mortgage you actively apply for, usually to access home equity, consolidate debt, or change your rate/term outside the normal renewal timeline. Refinancing involves a new stress test and may involve breaking your current term, which can trigger a prepayment penalty.

If you're happy with your lender and rate environment, renewal is simpler. If your needs have changed — you want to pull out equity, or consolidate higher-interest debt — refinancing might be worth the penalty, but run the math first.