Mortgage Switch vs Refinance: What’s the Difference?
A switch, also called a transfer, moves your same mortgage balance to a new lender at maturity, nothing more. A refinance changes how much you owe, usually to pull out equity, and brings new legal work, a new registration and a full requalification with it. The difference decides what either one costs you.
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What’s the difference between a mortgage switch and a refinance?
A mortgage switch, also called a transfer, moves your existing balance to a new lender at maturity with no new borrowing. A refinance changes how much you owe, usually to pull out equity, and brings a new appraisal, new legal work, a new registration and a full requalification. The transaction type, not the lender, decides the cost and the paperwork.
A switch, often called a transfer, happens at the end of your term. You are not borrowing a single additional dollar, you are simply moving the mortgage you already have to a different lender, usually because that lender is offering a better term.
A refinance is a different transaction entirely. You are changing the amount registered against your home, almost always to pull out equity for a renovation, debt consolidation or an investment, and that change triggers a fresh appraisal in most cases, new legal work, a new registration and a full requalification.
Because both can happen around the same date, your mortgage’s maturity, it is easy to assume they are one choice. They are not. Deciding whether to switch lenders at renewal is a different question from deciding whether you need to refinance at all.
The citable fact: A mortgage switch moves an unchanged balance to a new lender at maturity, while a refinance changes the amount borrowed and always brings new legal work and a full requalification.
How do a renewal, a switch and a refinance actually compare?
A renewal keeps your mortgage with the same lender and rarely requires requalifying. A switch moves the same balance to a new lender and does require requalifying, but carries little or no prepayment penalty at maturity. A refinance borrows more, always requires requalifying, and can trigger a penalty if done before your term ends.
Put side by side, the three options separate cleanly on five points: whether the balance changes, who ends up holding the mortgage, whether you requalify, whether a penalty applies, and what it typically costs.
| Factor | Renewal, stay put | Switch, new lender | Refinance, any lender |
|---|---|---|---|
| Does the balance change? | No | No | Yes |
| Who holds it after? | Same lender | New lender | Same or new lender |
| Do you requalify? | Not normally | Yes, with the new lender | Yes, in full |
| Prepayment penalty? | No | No, if done at maturity | Yes, if done before maturity |
| Typical cost | Little to none | Low, often partly covered | Appraisal, legal, registration, possible discharge fee |
| When it happens | At maturity only | At maturity only | Any time, mid-term or at maturity |
The renewal column is the default. Do nothing, and your existing lender is required to send a renewal statement at least 21 days before your term ends, under the federal rules on renewing your mortgage. The switch and refinance columns are both choices you have to make deliberately.
The citable fact: Of the three, only a refinance changes how much you owe, and only a refinance always carries a full requalification.
Can a switch give you cash the way a refinance can?
No. A switch keeps your existing balance and amortization exactly as they are, so there is no new money to take out. Only a refinance, which increases what you owe, can put cash in your hands, and only up to the refinance ceiling your lender allows.
A switch is mechanically incapable of putting money in your pocket. You are moving the same balance and the same amortization to a new lender, nothing is added to it, so there is nothing new to disburse to you.
A refinance works the opposite way. You can increase your mortgage up to the conventional refinance ceiling of 80% loan-to-value, and the difference between your old balance and the new, larger one is paid out to you at closing.
If what you actually want is to move without losing your current mortgage, not cash, look at porting your mortgage instead, or read our plain explanation of what porting a mortgage means. Both solve a different problem than a switch or a refinance does.
The citable fact: A switch cannot generate cash because the balance does not change; a refinance can, up to an 80% loan-to-value ceiling on a conventional refinance.
When should you switch, and when are you forced into a refinance instead?
A switch belongs at maturity, when your term ends and no prepayment penalty applies. A refinance can happen any time, including mid-term, but doing it before maturity means paying whatever penalty your current mortgage contract sets. Timing is the single biggest cost lever either way.
A switch is a maturity event. It happens when your term ends, which is also the one moment no prepayment penalty applies, because you are not breaking anything, you are letting the old agreement end and starting a new one elsewhere.
A refinance has no such restriction. You can refinance mid-term, but doing so before your maturity date means breaking your current mortgage early, and your existing lender’s prepayment penalty applies in full.
You will not find a penalty figure or a worked formula here, because the amount depends on your balance, your remaining term and the method in your contract. Your lender’s payout statement carries the real number, and it is only good to the date on it.
Your existing lender’s payout statement is the only place that penalty number actually lives. No page, including this one, can quote it for you.
The citable fact: A switch done at maturity carries no prepayment penalty; a refinance done before maturity does, calculated by your existing lender under your mortgage’s own penalty clause.
Do you have to requalify for a switch or a refinance?
A straight renewal with your current lender typically does not require requalifying. A switch to a new lender does, because that lender is underwriting you fresh. A refinance always requires full requalification, since you are borrowing more and the lender must confirm you can carry it.
Staying with your current lender at renewal is the one path that typically skips a new credit pull or income review, because the lender already holds your file and is simply extending the agreement.
Renewing in place with your existing lender does not usually involve requalifying, though that is lender practice rather than a rule you can rely on. Moving to a new lender does involve it, which is the part people are surprised by.
A switch resets that. The new lender did not originate your mortgage, so it underwrites you as a new applicant, pulling credit, confirming income and running the mortgage stress test against your file again.
A refinance requires the same full requalification as a switch, for the same reason, plus the lender has to qualify you for the larger amount you are asking to carry.
The citable fact: A straight renewal with your existing lender typically avoids requalifying; a switch to a new lender and a refinance of any kind both require it in full.
What is the collateral charge trap, and why does it make switching cost more?
Many mortgages today are registered as collateral charges, which secure more than the amount you borrowed. A collateral charge usually cannot simply be assigned to a new lender, it has to be discharged and re-registered, adding cost that an ordinary standard charge switch would not carry, and sometimes making the switch uneconomic.
A collateral charge is a mortgage registered for more than the amount you actually borrowed, which lets your lender advance you more later without registering a new charge. Look up the term in our mortgage glossary if your mortgage statement uses language you don’t recognise.
The trap is what happens when you try to leave. A standard charge, registered for exactly what you borrowed, can usually be assigned to a new lender at maturity for little more than paperwork. A collateral charge usually cannot be assigned the same way, it typically has to be discharged and a brand new charge registered in its place.
That discharge-and-re-register step brings in costs an ordinary switch would not have, including a lender discharge fee and, in some cases, new legal work. On a smaller mortgage, those costs can erase most of the benefit of switching at all.
Some lenders will cover part or all of the cost of taking on a switch, including the discharge and re-registration a collateral charge forces. How much varies, so ask what is on offer before you assume the move is free.
The citable fact: A collateral charge mortgage usually must be discharged and re-registered rather than assigned to a new lender, which is what makes switching more expensive, and sometimes not worth doing, for that specific mortgage type.
What does a mortgage switch cost?
A switch at maturity on a standard charge mortgage can cost very little, since many lenders cover some or all of the cost to win a performing mortgage. A switch of a collateral charge costs more, because discharging and re-registering the old charge brings in a lender discharge fee and new legal work.
On a standard charge mortgage switched at maturity, cost can be close to nothing. Many lenders will cover some or all of the fees involved, including the appraisal, legal work and discharge, because they are picking up a mortgage that is already performing rather than underwriting a stranger from scratch.
A new lender may or may not want a fresh appraisal on a same-balance switch with no new money involved. Ask early, because an appraisal cost can change whether the move is worth making.
On a collateral charge switched at maturity, expect the lender discharge fee, typically $300 to $500, plus whatever legal work the discharge and re-registration requires.
The citable fact: A standard charge switch at maturity can cost very little, while a collateral charge switch brings in a lender discharge fee typically $300 to $500 plus new legal work.
What does a mortgage refinance cost?
A refinance brings a new appraisal, typically $300 to $600, legal fees that typically run $1,500 to $3,000, and, if you are moving to a new lender, a lender discharge fee typically $300 to $500. None of it is small, and all of it should be weighed against what refinancing is meant to achieve.
A refinance brings three cost categories regardless of which lender ends up holding it. An appraisal, typically $300 to $600, establishes your home’s current value, since the lender can no longer rely on a purchase price.
Legal fees on a refinance typically run $1,500 to $3,000, often higher than on a purchase, because the lawyer is paying out your existing lender, running new title searches and registering a new charge, all at once.
If the refinance also moves you to a new lender, add the lender discharge fee, typically $300 to $500, on top. See the full refinance cost breakdown for Ontario or the equivalent for Alberta for a line by line estimate. Compare current rates for whichever path makes sense at pekoe.ca/rates, updated daily, before you commit to either one.
The citable fact: A refinance typically carries an appraisal fee of $300 to $600 and legal fees of $1,500 to $3,000, plus a $300 to $500 lender discharge fee if it also moves you to a new lender.
Does it cost more to switch or refinance in Ontario or in Alberta?
Neither province charges land transfer tax on a switch or a refinance, because no property is being bought or sold. Alberta still charges a Land Titles registration fee on the new mortgage, $50 plus $5 per $5,000 of the mortgage as registered. Ontario’s equivalent registration fee is not yet confirmed here. Alberta’s own Land Titles fee schedule sets it out.
Neither transaction involves buying or selling land, so neither Ontario’s provincial land transfer tax nor Toronto’s municipal land transfer tax applies to a switch or a refinance in either province.
Alberta differs only in how it charges for registering the new mortgage itself. Alberta Land Titles charges a $50 base fee plus $5 per $5,000 of the mortgage as registered, on any part thereof rounded up, whether that registration is a switch of a collateral charge or a refinance.
| Cost item | Ontario | Alberta |
|---|---|---|
| Land transfer tax | None, no land is bought or sold | None, no land is bought or sold |
| Mortgage registration fee | Not confirmed, see review flag below | $50 base fee plus $5 per $5,000 of the mortgage as registered |
| Legal fees, refinance | $1,500 to $3,000 typical | $1,500 to $3,000 typical, similar to Ontario |
| Appraisal | $300 to $600 typical | $300 to $600 typical |
| Lender discharge fee | $300 to $500 | $300 to $500 |
| Regulator | FSRA Brokerage Licence #13321 | Licensed by RECA |
Ontario’s land registry charges its own fee to register a new mortgage charge. Your lawyer can give you the figure for your transaction.
Show the math: Alberta registration fee on a $400,000 switch, illustrative
Show the math: Alberta registration fee on a $500,000 refinance, illustrative
Both examples above are illustrative, built only to show the formula. Your own registration fee depends on your actual mortgage amount as registered, not the amount you drew.
The citable fact: Neither province charges land transfer tax on a switch or a refinance, but Alberta charges a Land Titles registration fee of $50 plus $5 per $5,000 of the mortgage as registered, with no direct Ontario equivalent confirmed here.
What happens if you do nothing when your mortgage matures?
If you do nothing, your renewal statement arrives at least 21 days before your term ends, and many lenders will renew you automatically at whatever rate they set. That protects you from losing your mortgage, but not from overpaying, since an automatic renewal is rarely the lender’s best offer.
Your lender is required to send a renewal statement at least 21 days before your term ends, under the federal rules on renewing a mortgage, and if you do nothing, your term may renew automatically at the rate the lender sets.
Automatic renewal protects you from the mortgage becoming due in full, it does not protect you from overpaying. The lender’s automatic renewal rate is rarely their most competitive offer, and negotiating your renewal rate before the deadline is worth the conversation every time.
Read exactly what happens if you do nothing at renewal, and compare it against the demand data on how many Canadian mortgages are renewing right now. If you want a structured way to walk into that renewal conversation prepared, rather than accepting the first number your lender sends, the Renewal Negotiation Playbook is built for exactly that decision point.
The citable fact: Lenders must send a renewal statement at least 21 days before your term ends, and doing nothing usually renews you automatically, but rarely at your lender’s best available rate.
Where else should you look before you decide?
These related answers cover the adjacent decisions borrowers usually face at the same moment.
- The mortgage renewal process, stage by stage
- The mortgage refinance process, stage by stage
- How a mortgage prepayment penalty works in Canada
The full set lives on the Ask a Broker hub.
Frequently asked questions
Is a mortgage switch the same thing as a refinance?
No. A switch moves your unchanged balance to a new lender at maturity. A refinance changes how much you owe and requires a new registration, new legal work and a full requalification.
Will switching lenders hurt my credit score?
A switch involves a credit check like any new lender relationship, and a credit check on its own is a normal part of borrowing. It is not the kind of event that typically causes lasting damage to a well managed credit file.
Can I get cash when I switch mortgage lenders?
No. A switch keeps your existing balance exactly as it is, so there is no new money to disburse. Cash out only happens through a refinance, up to the conventional refinance ceiling of 80% loan-to-value.
What is a collateral charge, and how do I find out if I have one?
A collateral charge is a mortgage registered for more than you actually borrowed, which lets your lender advance more later without a new registration. Your mortgage statement or your lender can confirm which type you have, since it is not always obvious from the paperwork a borrower keeps at home.
Why does a collateral charge make switching more expensive?
A collateral charge usually cannot simply be assigned to a new lender the way a standard charge can. It typically has to be discharged and a new charge registered, which brings in a lender discharge fee and sometimes new legal work that an ordinary switch would not carry.
Does a mortgage switch trigger a prepayment penalty?
Not if it happens at maturity, when your term ends and nothing is being broken early. A penalty only applies when a mortgage is changed before its maturity date, which is a refinance situation, not a switch.
Can I refinance and switch lenders in the same transaction?
Yes. A refinance can move to a new lender in the same step that increases your balance, and in that case you absorb both the refinance costs and, if applicable, a lender discharge fee. Your broker can structure it as one transaction rather than two.
Do I need a lawyer to switch mortgage lenders?
Usually yes, because the new lender’s mortgage still has to be registered on title, even when the balance does not change. The scope of legal work is normally smaller on a standard charge switch than on a refinance.
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What happens if I do nothing when my mortgage matures?
Your lender must send a renewal statement at least 21 days before your term ends, and if you take no action your term typically renews automatically at the rate the lender sets. That protects you from the mortgage coming due, but it rarely gets you the lender’s best available offer.
Does Alberta charge land transfer tax on a switch or a refinance?
No. Alberta has no provincial land transfer tax at all, on a purchase, a switch or a refinance. It does charge a Land Titles registration fee on the new mortgage itself, based on the amount registered.
Is switching lenders at renewal always cheaper than refinancing?
Usually, because a switch does not increase your balance and a standard charge switch often costs little. A collateral charge switch narrows that gap, and the right comparison depends on your specific mortgage, which is worth a conversation with a broker rather than assuming either path is automatically cheaper.
Not sure whether to switch or refinance your file?
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Walk into your renewal with a plan, not just a rate. The Renewal Negotiation Playbook gives you the questions to ask before you sign anything.