Switching lenders at renewal: the rules and the real costs
Two regulatory changes in late 2024 made switching lenders at renewal meaningfully easier for a large group of Canadian borrowers. Here is exactly who they apply to, what a switch actually costs, and the one registration detail that can make it expensive.
Updated July 25, 2026What changed, and who it applies to
For years there was an odd asymmetry in Canadian mortgage rules. Renewing with your existing lender did not require you to requalify at the stress test rate, but moving to a different lender for the same loan did. The effect was that the customers with the least room to manoeuvre were the ones least able to shop, which is not a great design.
OSFI defines the minimum qualifying rate for uninsured mortgages as the greater of the mortgage contract rate plus 2 per cent, or 5.25 per cent, and states that it does not require lenders to apply the minimum qualifying rate when borrowers switch uninsured mortgages between federally regulated lenders without increasing either the amortisation period or the loan amount.
Source: Office of the Superintendent of Financial Institutions, page last updated January 29, 2026.
The Department of Finance amended the mortgage insurance rules to remove the requirement to apply the minimum qualifying rate on low ratio mortgages, meaning loan to value up to 80 per cent, that switch from a federally regulated lender to any new lender at renewal, effective for mortgage insurance applications submitted on or after December 16, 2024.
Source: Department of Finance Canada, December 16, 2024.
The practical translation: if you are moving the same mortgage, on the same amortisation, from one federally regulated lender to another at renewal, the qualifying rate is no longer the obstacle it used to be. You still have to be approved by the new lender, on its own criteria. FCAC is clear that the new lender may use different criteria than your original lender.
What counts as a straight switch
The relief is specific and narrow. For the insured low ratio case the published criteria are precise, and the uninsured case follows the same logic.
- The mortgage was originated at a federally regulated financial institution and was previously assessed against the minimum qualifying rate.
- You are renewing with a new lender at renewal.
- You have maintained the existing contractual amortisation schedule.
- The unpaid principal balance may be increased by up to $3,000 to cover related transaction costs such as penalties or fees. Equity take out is not permitted.
Add to the loan, take equity out, or extend the amortisation, and you are refinancing, not switching. Refinancing is a legitimate thing to do and it is a different transaction with different qualifying rules, different costs, and potentially a new mortgage insurance premium. Decide which one you are doing before you start, because the answer changes who will approve you.
What a switch actually costs
FCAC lists the categories directly: setup fees with the new lender, which may include discharge, registration, transfer or assignment fees from your current lender, an appraisal fee to confirm the value of your property if one is needed, and other administration fees.
We are deliberately not publishing a table of specific bank discharge fees here, because those are set by each lender, change without much notice, and vary by province and by registration date. Get your own lender's actual figure from your mortgage statement or by asking. A number you verified this month beats a number an article published last year.
Ask the new lender whether it will pay some or all of the costs to switch. FCAC suggests exactly this. Covering switch costs is a normal competitive tool, and on a standard charge straight switch it is common enough that you should treat it as a thing to ask for rather than a favour to request.
One more cost that is not a fee: your time and the completion timeline. A switch needs the new lender to approve, instruct, and register before your maturity date. Start it late and you will end up renewing where you are, at whatever is offered.
The collateral charge trap
This is the single detail that most changes the arithmetic of switching, and most borrowers do not know which one they have.
A mortgage is registered against your property either as a standard charge or a collateral charge. FCAC's description is direct: if your mortgage is registered with a collateral charge and you want to switch lenders, you may have to pay fees covering the removal of the charge from your existing mortgage and the registration of the new one. It also notes a condition people miss, that you must repay in full or transfer to the new lender all loan agreements secured by the collateral charge, which can include car loans or lines of credit.
Find out which one you have, now, not at renewal. FCAC's advice is simply to ask your lender. If it is a collateral charge, the switching cost is higher and you should factor the legal and registration cost into the comparison rather than discovering it three weeks before maturity. It does not make switching impossible. It makes the interest saving need to be bigger to justify it.
Working out whether it is worth it
Calculate the interest saving over the term, not the monthly difference
Take the rate difference, apply it to your balance, and multiply across the term. That is the prize.
Subtract every switching cost, after asking who will cover them
Discharge, registration, transfer, appraisal, legal where a collateral charge is involved.
Check what you lose or gain besides rate
Prepayment privileges, portability if you might move, and whether the new lender's servicing is something you can live with for the next several years.
Then take the competing quote back to your existing lender first
The best outcome of a switch analysis is often not switching. It is your current lender matching the rate so you keep the standard charge, avoid the fees, and skip the paperwork.
Common questions
Do I have to pass the stress test to switch lenders at renewal?
Not on a straight switch, for a large group of borrowers. OSFI does not require federally regulated lenders to apply the minimum qualifying rate when a borrower switches an uninsured mortgage between federally regulated lenders without increasing the amortisation period or the loan amount. The federal government made a matching change for insured low ratio mortgages effective December 16, 2024.
What is the minimum qualifying rate in Canada right now?
OSFI defines the minimum qualifying rate for uninsured mortgages as the greater of the mortgage contract rate plus 2 per cent, or 5.25 per cent. It is made up of a 2 per cent buffer and a 5.25 per cent floor, and OSFI reviews it at least annually.
How much does it cost to switch mortgage lenders at renewal?
It depends on your charge type and on what the new lender agrees to cover. FCAC lists the possible costs as setup fees with the new lender, which may include discharge, registration, transfer or assignment fees from your current lender, an appraisal fee if one is needed, and other administration fees. Many lenders will cover some or all of these to win the business, so ask before you assume.
Can I increase my mortgage when I switch lenders at renewal?
You can, but then it is no longer a straight switch, and the qualifying rules that made switching easy no longer apply. For insured low ratio straight switches the government's criteria allow the unpaid principal to be increased by up to $3,000 to cover related transaction costs such as penalties or fees, and specifically do not permit an equity take out.
Will I have to pay mortgage insurance again if I switch?
FCAC states you may have to pay a new mortgage loan insurance premium when you switch lenders if your loan amount increases or you extend the amortisation period. If you already have mortgage loan insurance, tell the new lender and ask your existing lender for the insurance certificate number, which may prevent you paying twice.
Sources
- Office of the Superintendent of Financial Institutions, Minimum qualifying rate for uninsured mortgages. Source for the minimum qualifying rate definition and the straight switch exemption. Page last updated January 29, 2026.
- Department of Finance Canada, Straight switches and portfolio insurance. Source for the insured straight switch criteria, effective December 16, 2024.
- Financial Consumer Agency of Canada, Renewing your mortgage. Source for the 21 day renewal statement rule, what a renewal statement must contain, automatic renewal, and the costs of switching lenders. Read July 25, 2026.
- Financial Consumer Agency of Canada, Mortgage fees: prepayment penalties. Source for how three months interest and the interest rate differential are calculated. Read July 25, 2026.
- Bank of Canada, Policy interest rate. Source for the target for the overnight rate and the schedule of announcement dates. Read July 25, 2026.
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