Refinance vs. Switching Your Mortgage in Ontario: What’s the Difference?

By Andrea Jolly | Mortgage Broker

Refinancing vs Switching a Mortgage in Ontario

Homeowners often review their mortgage options when interest rates change or their financial goals shift. Two common options are refinancing a mortgage or switching lenders.

While both options involve making changes to your mortgage, they serve different purposes and may involve different costs or approval processes.

If you own a home in Ontario, understanding the difference between refinancing and switching can help you decide which option may be appropriate for your situation.

What Is a Mortgage Refinance?

Refinancing means replacing your existing mortgage with a new one, often to access equity or change the terms of the loan.

Homeowners may refinance for several reasons, including:

• accessing home equity for renovations or investments

• consolidating higher-interest debts

• adjusting the mortgage term or amortization

• securing a different interest rate

When refinancing, lenders usually reassess the mortgage application by reviewing income, credit history, and the current value of the property.

What Is a Mortgage Switch?

Switching a mortgage typically means transferring your mortgage from one lender to another without increasing the loan amount.

Many homeowners consider switching their mortgage at the end of their current mortgage term.

Reasons homeowners may switch lenders include:

• seeking a better interest rate

• improving mortgage features or flexibility

• working with a lender that better fits their needs

Because the mortgage balance usually remains the same, switching lenders can sometimes involve fewer changes than refinancing.

Key Differences Between Refinancing and Switching

Although the two options sound similar, they serve different purposes.

Refinancing

• Allows homeowners to access home equity

• May increase the mortgage amount

• Often involves a full mortgage application review

• May involve legal and appraisal costs

Switching

• Typically keeps the mortgage balance the same

• Usually done when the mortgage term ends

• May involve fewer changes to the mortgage structure

• Often focuses on securing a better rate or lender terms

When Should Homeowners Review Their Mortgage?

Homeowners may consider reviewing their mortgage if:

• their mortgage term is approaching renewal

• interest rates have changed significantly

• they want to access equity from their home

• they want to consolidate debts

• their financial goals have changed

A mortgage professional can help evaluate both refinancing and switching options to determine which approach may align best with a homeowner’s goals.

Planning Your Next Mortgage Step

Every mortgage situation is unique. Reviewing your mortgage regularly can help ensure it continues to align with your financial plans.

If you’re considering refinancing or switching your mortgage in Ontario, discussing your options with a mortgage professional can help you understand what may be possible based on your current situation.