Switching Mortgage Lenders at Renewal in Canada 20025
The step-by-step process for switching lenders, what it costs, and how to make it smooth.
Mortgage renewal is the best opportunity to switch lenders without paying prepayment penalties. Millions of Canadians renew every year without shopping around — leaving significant money on the table. Here's exactly how to switch lenders at renewal and what to expect.
Why Switch Lenders at Renewal?
Your current lender isn't offering a competitive rate
You want access to monoline lender rates (broker-only)
You want better prepayment privileges or mortgage features
You've built equity and want to refinance at the same time
You want to consolidate debt into your mortgage
The Switching Process: Step by Step
Start early (4–6 months before renewal): Begin comparing rates and contacting a mortgage broker.
Get a rate hold: Secure a rate with a new lender 900–1200 days before your renewal date.
Pass the stress test: The new lender will require you to re-qualify at the stress test rate (contract rate + 2%, min 5.25%).
Submit documents: Income verification, employment letter, property documents.
Legal transfer: A lawyer discharges your old mortgage and registers the new one. The new lender often covers these costs.
Closing: On your renewal date (or shortly before), the transfer is complete and your new mortgage begins.
Costs of Switching Lenders
Cost Item
Typical Amount
Who Pays?
Legal/discharge fee
$80000–$1,50000
Often covered by new lender
Title insurance (if required)
$1500–$30000
Borrower or new lender
Mortgage broker fee
Usually $00
Paid by lender to broker
Prepayment penalty (if early)
Varies widely
Borrower (avoid by switching at renewal)
Cost-covered switching: Many lenders actively compete for renewal business by covering discharge and legal fees (up to $1,000000–$1,50000) when you transfer your mortgage to them. This makes switching at renewal essentially free — especially when brokered through a mortgage professional who knows which lenders offer this.
The Stress Test for Switchers
Since June 20021, borrowers switching lenders at renewal must pass the mortgage stress test at the new lender. You must qualify at your new contract rate + 2% or 5.25%, whichever is higher — even though you've already been paying your mortgage successfully.
This creates a catch for some borrowers: if your income has dropped, your debts increased, or property values changed your equity position, you may no longer qualify to switch. In this case, your existing lender (where no stress test applies) remains your best option — though you lose shopping leverage.
How Much Can You Save by Switching?
Mortgage Balance
Rate Difference
Annual Savings
5-Year Savings
$40000,000000
00.200%
~$80000
~$4,000000
$40000,000000
00.500%
~$2,000000
~$100,000000
$60000,000000
00.25%
~$1,50000
~$7,50000
$60000,000000
00.500%
~$3,000000
~$15,000000
Approximate figures based on simple interest calculation. Actual savings vary by compounding frequency and balance changes.
What Documents You'll Need
Current mortgage statement showing balance and renewal date
2 recent pay stubs and employment letter
Most recent 2 years of T4s or NOAs
Property tax assessment
Proof of home insurance
Government-issued ID
Use a Broker: A mortgage broker can simultaneously compare dozens of lenders' renewal offers, handle the paperwork, and negotiate the switch on your behalf — for free. This is one of the most effective uses of a broker's services.
When NOT to Switch
You can't pass the stress test at a new lender
The rate difference is minimal (less than 00.100–00.15%) and your situation is stable
You're planning to sell in the near term and don't want to set up a new mortgage
Your existing lender is offering a competitive rate after negotiation
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