Mortgage renewal is one of the most financially significant moments in Canadian homeownership — and one of the most commonly mishandled. At the end of every mortgage term, you have the opportunity to renegotiate your rate, switch lenders, and make changes to your mortgage structure. Most Canadians simply sign the renewal slip their bank sends and move on. That is often a mistake worth thousands of dollars.
When your mortgage term ends — whether that is 1, 2, 3, 5, or 7 years — you do not own your home free and clear (unless your amortization is also complete). You still have a remaining balance. That balance must be renewed: you enter a new term at a new interest rate. Renewal happens multiple times over a typical amortization. On a 25-year amortization with 5-year terms, you renew 5 times.
Renewal is not automatic continuation — it is a new mortgage contract. This is your chance to get a better rate, restructure your amortization, change from fixed to variable (or vice versa), add or remove co-borrowers, or move to a different lender entirely.
Your lender is required to send a renewal notice at least 21 days before your term end date. In practice, most major banks send renewal notices 4–6 months before term end. Your mortgage statement, annual summary, or online banking account shows your maturity (renewal) date.
Do not wait for your bank's renewal letter. Start comparing rates 4–6 months before your renewal date. Here is why this matters:
Banks know that most Canadians renew with their current lender — industry data suggests 70–80% of borrowers stay put. This gives lenders little incentive to offer their best rate in the initial renewal notice. The rate on your renewal statement is typically a "posted" rate — the bank's standard offering, not its competitive rate. By doing nothing and signing, you leave money on the table.
Before contacting anyone, research current best rates. Check rate comparison sites, consult a mortgage broker, and note what competitors are advertising. This is your benchmark for negotiating with your current lender.
Contact 2–3 other lenders or a mortgage broker. Get actual rate quotes in writing. Competing quotes are your most powerful negotiating tool — lenders want to keep your business and will often match or beat a legitimate competing offer.
Call your current lender and tell them you have competing offers. Ask specifically: "Is this your best rate? I have an offer for X% from another lender." Many lenders have undisclosed retention rates — lower rates they can offer to keep customers who ask.
Rate is important but not the only factor. Compare prepayment privileges (some lenders allow more extra payments), portability, penalties for breaking the mortgage, and customer service quality. A slightly higher rate with better prepayment flexibility might be worth more over the term than the lowest rate with restrictive terms.
Switching lenders at renewal is easier than most people realize. Unlike breaking a mortgage mid-term, switching at renewal carries no penalty. You avoid the stress test hassle in some cases — though switching lenders typically requires a new stress test application at the new lender. Your new lender usually covers most or all transfer costs:
In practice, switching lenders at renewal can be completely free. The barrier is paperwork — you need to provide income documents, employment verification, and a new credit check. For borrowers whose financial situation has not changed much, this process takes a few hours of paperwork for potentially thousands of dollars in savings.
If you renew with your current lender with no changes, you are generally exempt from re-qualification (no stress test). However, if you switch lenders or add to your mortgage (refinance), you will be stress tested at the new lender. Borrowers who may not pass the stress test today (due to income changes, new debts, or credit issues) face a constraint: they may need to stay with their current lender even if better rates exist elsewhere.
The term you choose at renewal has significant consequences. Consider:
In 2025, many borrowers renewing from 2020 rock-bottom rates face significantly higher renewal rates. For these borrowers, the right term choice depends heavily on expectations for Bank of Canada rate moves over the next 1–5 years.
Renewal is an excellent time to make a lump sum prepayment without penalty. Even if your mortgage has prepayment restrictions during the term, the renewal window (before or on the renewal date) often allows penalty-free extra payments. Consult your mortgage agreement for the specific terms.
In a falling rate environment, you might consider breaking your current mortgage before it matures to lock in a lower rate. This involves paying a prepayment penalty (the greater of 3 months' interest or the Interest Rate Differential for fixed mortgages) and re-qualifying. Calculate whether the interest savings over the remaining term exceed the penalty cost. A mortgage broker can run this analysis for you.
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