Mortgage Renewal Guide in Canada 2025

For many Canadians, mortgage renewal is one of the biggest financial decisions of the year — yet most people simply accept whatever rate their existing lender offers. That's often a costly mistake. Here's how to navigate renewal strategically in 2025.

When Does Your Mortgage Renew?

Your mortgage renews at the end of your current term. Most Canadian mortgages have 5-year terms, though 1, 2, 3, and 4-year terms are common. At the end of your term, the remaining balance of your mortgage needs to be renewed at a new rate and term with either your existing lender or a new one.

The Renewal Timeline

The Renewal Offer Trap

Your current lender is required to send you a renewal offer 21 days before your term expires (some lenders send offers 3–6 months early). The renewal offer rarely contains the best rate available. Lenders know that most borrowers will accept it out of inertia — especially if switching means re-qualifying with the stress test.

Staying vs. Switching Lenders at Renewal

Staying with Your Current Lender

Advantages:

• No stress test required (the biggest advantage)
• Seamless process — just sign new terms
• No legal fees or switching costs

Disadvantages:

• Your lender knows you won't easily switch, and may not offer best rate
• You miss access to potentially lower rates at other lenders

Switching to a New Lender

Advantages:

• Access to competitive rates from 50+ lenders through a broker
• New lender may cover switching costs (legal fees for discharge and registration)
• Ability to change terms, features, or prepayment privileges

Disadvantages:

• Must pass the stress test at the new lender (if federally regulated)
• Minor legal costs (often covered by the new lender)
• More paperwork required

Negotiating Your Renewal Rate

Even if you plan to stay with your current lender, you have leverage — especially if you have a competitive quote from another lender. Here's how to negotiate:

1. Get a competing quote (from a broker or another lender) before contacting your current lender
2. Call your lender's retention department (not the branch — call the renewal desk)
3. Share the competing quote and ask if they can match or beat it
4. Be willing to walk away — your lender would rather keep you at a slightly lower rate than lose you

Fixed vs. Variable at Renewal

Renewal is also a time to reassess whether a fixed or variable rate suits your situation. In 2025:

• Fixed rates offer certainty and protection against rate increases — best if you prefer predictable payments
• Variable rates typically start lower than fixed but carry interest rate risk — best if you expect rates to fall and can handle payment variability

Refinancing vs. Renewing

Renewal simply continues your mortgage at a new rate. Refinancing changes the mortgage amount (accessing equity, consolidating debt, or changing amortization). You can refinance at renewal, but refinancing mid-term triggers prepayment penalties.

What If You Can't Pass the Stress Test to Switch?

If your income, credit, or debt situation has changed since you originally qualified, you may not pass the stress test at a new lender. In this case, staying with your current lender (no stress test) is often the best option — and negotiating the best rate possible within that constraint.