Mortgage renewal in Canada: how it works and how to pay less

What happens when your mortgage term ends?

A Canadian mortgage is amortized over decades but signed in short terms — most commonly five years. When the term ends, the contract ends with it: the remaining balance either gets renewed into a new term, refinanced, or paid out in full. Your lender doesn't reassess your income or credit for a simple renewal with them; they send a renewal offer and, if you do nothing, most will auto-renew you.

Federally regulated lenders must send you a renewal statement at least 21 days before your term ends, stating the balance, rate, and payment. In practice you'll usually hear from them much earlier — because they'd like you to sign before you shop around.

When should you start working on your renewal?

Start about six months out, and get serious at 120 days. Most lenders will hold a renewal rate for 90 to 120 days before your maturity date, which means you can lock today's rate and still benefit if rates fall before closing. Leaving it to the final weeks costs you exactly the leverage the timeline is supposed to give you.

• 6 months out — check your maturity date, current rate, and balance; note your prepayment room for the year.
• 120 days out — get rate quotes from at least two other lenders or a broker, and ask your lender to hold its best rate in writing.
• 60–90 days out — decide: stay, switch, or refinance. If switching, start the application so the transfer completes by maturity.
• 21 days out — you'll have your lender's formal renewal statement; compare it against your held quotes before signing anything.

Should you stay with your lender or switch?

Switching at renewal got dramatically easier in late 2024. OSFI's update to Guideline B-20, in force November 21, 2024, removed the stress test for “straight switches” — moving an existing mortgage to a new lender at renewal with the same loan amount and amortization schedule. That applies to insured and uninsured mortgages alike, so you no longer have to re-qualify at a higher rate just to take a better offer across the street.

A straight switch keeps the mortgage as-is; only the lender changes. If you want to borrow more, extend your amortization, or consolidate debt, that's a refinance — a new application with full qualification, including the stress test.

How do you negotiate a better renewal rate?

Lenders price renewals on inertia: the first letter is built for the customer who signs and mails it back. The counter is simple — competing quotes, in writing, before you respond.

1. Collect two or three written quotes — from other lenders directly, or one call to a mortgage broker who shops dozens at once.
2. Ask your current lender to beat the best quote, not just match it. Retention teams have discretion the renewal letter doesn't show.
3. Negotiate the whole offer: term length, prepayment privileges, and portability matter alongside the rate.
4. Get the final offer in writing with a rate hold, then take the weekend before you sign.

Brokers are paid by the lender on a switch, so their quotes typically cost you nothing — and even if you end up staying, their best offer is your negotiating floor.

What does switching lenders actually cost?

On a straight switch at maturity there's no prepayment penalty — the term is over. What's left are administrative costs, and competitive lenders routinely cover most of them to win your balance.

• Discharge or assignment fee from your old lender — commonly $200–$400, varies by lender and province.
• Appraisal, if the new lender wants one — typically $300–$500, and frequently waived or reimbursed.
• Legal or title-transfer work — usually handled through a title company and often paid by the new lender on a switch.
• Up to $3,000 in fees can typically be added to the mortgage balance on a switch without it ceasing to count as a straight switch.

Fixed or variable at renewal?

There's no universally right answer — the honest framing is about risk, not prediction. A fixed rate buys certainty for the term; a variable rate is historically cheaper on average but moves with the Bank of Canada. Renewal is also the free moment to change type: switching between fixed and variable mid-term triggers penalties, while doing it at renewal costs nothing.

• Choose fixed if a payment increase would strain your budget — certainty has real value.
• Consider variable if you have room to absorb rate moves and want the historically lower average cost.
• Shorter fixed terms (1–3 years) split the difference when you expect rates to drift down but don't want variable exposure.

The most expensive renewal mistakes

• Signing the first offer — the single costliest habit in Canadian mortgages; the letter is priced for people who don't shop.
• Missing your own maturity date — leaving no time to switch means taking whatever your lender offers.
• Comparing only the rate — a slightly cheaper mortgage with weak prepayment privileges can cost more over the term.
• Auto-renewing into a closed posted-rate term — the worst of both: a high rate and penalties to escape it.
• Forgetting a lump-sum prepayment before renewal — at maturity you can usually pay down any amount penalty-free, shrinking the balance you renew.

Your mortgage renewal checklist

1. Find your maturity date, balance, current rate, and prepayment room (it's on your mortgage statement).
2. Set a reminder for 120 days before maturity — that's when rate holds open.
3. Gather quotes: at least two lenders or one broker, in writing.
4. Ask your lender's retention team to beat the best quote.
5. Decide stay / straight switch / refinance based on the numbers, not the paperwork friction.
6. Make any penalty-free lump-sum prepayment before the new term starts.
7. Sign only a written offer you've compared against the market — never the unopened default.