Updated: April 2025  |  bremo.io financial guides

Mortgage Renewal in Canada — How to Get a Better Rate

Mortgage renewal is one of the most important — and most overlooked — financial events for Canadian homeowners. When your mortgage term ends, you don't automatically get the best rate. You need to negotiate or shop around. This guide explains how to handle renewal strategically.

What Happens When Your Mortgage Comes Up for Renewal

When your mortgage term expires (typically every 1-5 years), your lender sends you a renewal offer. This offer contains a proposed new rate and term. If you do nothing — sign the paper and send it back — you're leaving money on the table in most cases. Lenders' renewal offers are almost never their best rates.

When to Start the Renewal Process

Start early — 3 to 6 months before your renewal date is ideal. Here's why:

• Most lenders allow you to lock in a new rate 120 days in advance
• You have time to shop around and negotiate without pressure
• If you want to switch lenders, the process takes time (application, underwriting, legal work)
• Early renewal sometimes triggers penalties at your current lender — check your contract

Negotiating with Your Current Lender

Your current lender wants to keep your business. Use that to your advantage. Steps:

1. Get competing rate quotes from 2-3 other lenders or through a mortgage broker
2. Call your current lender's retention department (not just the branch)
3. Tell them you have competitive offers and ask them to match or beat them
4. Be willing to walk away — sometimes the best negotiating is simply being prepared to switch

Banks often have unpublished "discretionary" rates they can offer to retain existing clients. These aren't advertised but can be 0.2-0.5% below the standard renewal offer.

Switching Lenders at Renewal

Switching lenders at renewal is less complicated than many homeowners realize. The new lender pays the legal transfer cost (sometimes called a "discharge fee" or "legal fees"), which can be several hundred dollars. You'll need to:

• Apply to the new lender with updated financial documentation
• Pass the mortgage stress test at the new lender
• Sign new mortgage documents with a lawyer

What the Best Renewal Rate Looks Like

The best available rates at renewal are typically 0.3-0.8% below what your current lender's initial renewal offer will be. For a $400,000 mortgage balance, 0.5% lower rate saves approximately $2,000 per year. Over a 5-year term, that's $100 — well worth a few phone calls and some paperwork.

Should You Change Your Term at Renewal?

Renewal is an opportunity to reassess which term length makes sense for your current situation. Common considerations:

• Are you planning to sell in the next few years? Consider a shorter term or variable
• Do you need payment certainty? Stick with 5-year fixed
• Are rates currently high and expected to fall? Short-term fixed (1-2 years) lets you renew sooner into potentially lower rates
• Are rates low relative to history? Lock in longer term

Using a Mortgage Broker at Renewal

A mortgage broker can shop your renewal across multiple lenders at no cost to you. Brokers are paid by the lender that gets your business. This is an efficient way to ensure you're seeing the full market rate landscape without making multiple applications.

Renewing Early (Breaking Your Mortgage)

Sometimes it makes sense to break your current mortgage before it matures to lock in a better rate. Whether this makes financial sense depends on the break penalty versus the interest savings from the better rate. Use a mortgage break-even calculator or ask a broker to model the numbers for your specific situation.