Your lender just sent you a renewal offer. It looks official. It lists a rate, a term, a new monthly payment. Most Canadians sign it within a few days.
That reflex costs the average borrower $13,857 — the estimated cost of accepting a bank's first renewal offer instead of shopping around. On a larger mortgage at a wider rate spread, the number climbs past $25,000.
This article walks you through every decision you face at renewal, in the order you should make them. We'll cover when to start, whether to stay with your lender or switch, how to negotiate, which rate term makes sense right now, and what the 2024 rule changes mean for your options. By the end, you'll know exactly what to do — and what each choice will actually cost you.
What mortgage renewal actually is (and isn't)
Most people conflate "mortgage" with "mortgage term." They're not the same thing. Your amortization is the total time to pay off the loan — typically 25 or 30 years. Your term is how long your current rate agreement lasts — typically 1, 2, 3, or 5 years.
When your term ends, you renew. The mortgage doesn't expire; you're just renegotiating the rate and term for the next segment of your amortization. The property, the lender, and the original loan structure all stay the same — unless you choose to change them.
Two things about renewal surprise most borrowers:
- You do not need to requalify with your current lender at renewal. Your lender isn't re-underwriting you. They're offering you a new rate. No new income documents, no new appraisal, no stress test — as long as you stay with them and don't change the loan amount or amortization.
- Switching lenders no longer requires passing the stress test — for a straight switch. This is a 2024 rule change we'll cover in detail below.
By law, federally regulated lenders must send you a renewal statement at least 21 days before maturity. In practice, most major banks send offers 30–90 days out; some mail notices as early as 120–180 days before maturity. The legal minimum is 21 days — and that's nowhere near enough time to make a good decision.
The 120-day window: start here, not at 21 days
Most lenders allow you to lock in a new rate up to 120 days before your maturity date without paying a prepayment penalty. This is standard industry practice for federally regulated lenders, though not a legal requirement in all cases.
This window is the most valuable tool available to a renewing borrower. Here's why:
- Rate hold: Locking in at 120 days protects you if rates rise before your maturity date. If rates drop, most lenders let you renegotiate or automatically lower to the new rate before you close.
- Negotiation time: Getting a competing written offer takes 1–2 weeks. You need time to use it as leverage with your current lender's retention team (more on that below).
- Switching time: If you decide to move to a new lender, the administrative process — discharge, registration, legal review — typically takes 3–6 weeks. Starting at 21 days doesn't leave enough room.
Count back 120 days from your mortgage maturity date. That's your start date. If you don't know your maturity date, it's on your original mortgage documents or your annual mortgage statement from your lender.
The most common renewal mistake isn't choosing the wrong rate — it's starting too late. Borrowers who receive a renewal letter and sign it within a week (without shopping) are essentially paying a convenience premium. The lender counts on that.
The 2025–2026 context: why this renewal matters more than usual
If you're renewing in 2025 or 2026, you're part of an unusually large cohort — and you're likely facing an unusually large payment change.
During the pandemic, the Bank of Canada held its overnight rate at a historic low of 0.25%. Five-year fixed mortgage rates briefly fell below 2%, with some lenders offering rates as low as 1.39–1.89% in 2020–2021. Hundreds of thousands of Canadians locked in at those levels on 5-year terms.
Those terms are now expiring into a materially different rate environment. The Bank of Canada currently sits at 2.25% (held April 2026), and the best available 5-year fixed insured rates are approximately 3.99–4.04% through the broker channel.
The numbers from the Bank of Canada tell the story:
| Cohort | Locked-in rate (approx.) | Expected payment change | Note |
|---|---|---|---|
| 5-yr fixed, renewing 2025 | 1.5–2.2% | +15–20% (~$425/mo) | Largest shock group |
| 5-yr fixed, renewing 2026 | 2.0–2.8% | +6% (~$200/mo) | Somewhat softened by BoC cuts |
| Variable (adjustable payments) | Floated with prime | −5 to −7% | Already repriced through hike/cut cycle |
Approximately 1.2 million Canadians renewed in 2025 alone (CMHC), with another million expected in 2026. 75% of those facing payment increases hold a 5-year fixed-rate mortgage — so if that's you, you're in the majority.
The good news: the gap between 2020–2021 rates and current rates is now partially bridged by subsequent BoC rate cuts. Borrowers renewing in 2026 face a smaller shock than those who renewed in 2024 or early 2025. And from this point, most major bank economists expect the BoC to hold near 2.25% through most of 2026 — meaning today's rates are roughly where renewal rates will land.
Decision 1: stay with your lender or switch?
The most consequential decision at renewal is whether to stay with your current lender or move. And the barrier to switching just got significantly lower.
The 2024 stress test rule changes
For years, switching lenders at renewal required passing the mortgage stress test — qualifying at your contract rate plus 2%, or the minimum qualifying rate, whichever was higher. This kept many borrowers trapped with their current lender even when competitors offered materially better rates.
That changed in two stages:
| Mortgage type | Rule | Since |
|---|---|---|
| Insured (under 20% down) | No stress test for straight switches at renewal | Canadian Mortgage Charter (early 2024) |
| Uninsured (20%+ down) | No stress test for straight switches at renewal | November 21, 2024 (OSFI) |
A straight switch means: same loan balance, same remaining amortization period, different lender. No new money, no restructuring. The moment you borrow more or extend your amortization, it becomes a refinance — and the stress test applies.
The stress test removal applies to switching between federally regulated lenders. Some lenders — notably BMO and TD — were reported to still be applying stress tests to some switches as of late 2024. Confirm with any new lender before assuming the rule applies to your specific situation.
The collateral charge trap
Here's the problem that almost no mainstream article explains clearly: not all mortgages switch the same way.
Standard charge mortgages (used by most monolines and many credit unions) can be "assigned" — transferred directly to a new lender with minimal legal fees, often covered entirely by the new lender.
Collateral charge mortgages — used by TD Bank, RBC (Homeline), and National Bank by default — cannot be assigned. They must be fully discharged at the old lender and re-registered at the new one. That means full legal and notary fees regardless of what the new lender covers — typically $600–$1,000 out of pocket.
If you have a collateral charge mortgage and any other product secured against it (a home equity line of credit, for example), that product must also be repaid or transferred. Many borrowers don't know their mortgage is registered as a collateral charge until they try to switch.
Look at your mortgage documents or call your lender and ask directly: "Is my mortgage registered as a standard charge or a collateral charge?" If it's a collateral charge, factor in the full legal cost before deciding whether switching is worth it.
The real cost of switching — and who pays it
For a standard charge mortgage, switching lenders at renewal typically costs:
| Cost | Standard charge | Collateral charge | Often covered by new lender? |
|---|---|---|---|
| Discharge fee (current lender) | $200–$400 | $200–$400 | Sometimes |
| Legal / registration fee | $700–$1,000 | $600–$1,000+ | Often (standard charge only) |
| Title insurance (if required) | $150–$300 | $150–$300 | Sometimes |
| Total typical range | $700–$1,800 | $700–$2,000+ | — |
Many competing lenders — particularly monolines and online lenders — cover the switching costs entirely as an incentive to win your business. Some offer cash switching bonuses up to $4,000. Always ask explicitly: "Will you cover my legal fees and discharge costs if I switch?"
The break-even math is straightforward: if a new lender offers 0.25% less than your current lender and covers your switching costs, you're ahead from month one. Even if you cover the switching costs yourself, a $1,500 outlay pays back in under a year on a typical mortgage balance.
When switching costs more than staying: if the rate difference is less than 0.10–0.15%, or if you have a collateral charge with a large HELOC that can't easily transfer, the numbers may not work. Do the math before committing.
Decision 2: how to negotiate with your current lender
Even if you ultimately stay with your current lender, you should never sign the first offer they send you. The initial renewal statement is typically at or near their posted (rack) rate — a starting point for negotiation, not the final word.
Call the retention team, not the general service line
Most large banks have a dedicated mortgage retention team — specialists whose job is to prevent you from leaving. They have access to rate buckets that general service representatives don't. When you call, say exactly this:
"I've received my renewal offer, but I've also been comparing rates with other lenders and I have a written offer that's lower than what you've sent me. I'd like to speak with someone from your mortgage retention team about whether you can match or beat it."
A competing written offer is the single most effective negotiation lever you have. Without one, you're negotiating without leverage. With one, the bank knows you're a flight risk — and retention specialists are measured on the mortgages they save.
What discount to expect
The spread between a bank's posted rate and its best negotiated rate can be 0.50–2.00% depending on the bank, the term, and the market. On a $500,000 mortgage, a 0.25% reduction saves over $7,500 across a 5-year term. A 0.50% reduction saves over $15,000. These are not rounding errors — they're worth a 20-minute phone call.
If the retention team says they can't match the competing offer, ask them to confirm in writing. Then proceed with the switch.
Decision 3: fixed, variable, or shorter term?
Most renewal articles present this as a binary choice: fixed or variable. The reality in June 2026 has a third option that many borrowers are overlooking.
Current rate landscape
The Bank of Canada overnight rate sits at 2.25%. Through the broker channel:
- Best 5-year fixed (insured): approximately 3.99–4.04%
- Best variable rate: approximately 3.30–3.40% (prime minus a discount)
- Best 3-year fixed: approximately 4.04%
- Spread between variable and 5-year fixed: ~65 basis points — the narrowest since early 2022
| Option | Approx. rate | Best for | Main risk |
|---|---|---|---|
| 5-year fixed | ~4.00% | Budget certainty, tight cash flow | IRD penalty if you break early; can be $15K–$28K |
| Variable (adjustable) | ~3.35% | Rate risk tolerance, belief in further BoC cuts | Payment rises if BoC hikes; narrow spread limits upside |
| 3-year fixed | ~4.04% | Certainty now, flexibility to re-evaluate in 3 years | Slightly higher than 5-year; another renewal in 2029 |
| 2-year fixed | ~4.10–4.20% | Shorter lock-in, expect rate drop by 2028 | Higher rate for the term; another renewal sooner |
The break penalty factor that most people miss
The most underweighted factor in the fixed-vs-variable decision is what it costs to break the mortgage early. On a 5-year fixed at a Big 6 bank, the Interest Rate Differential (IRD) penalty for breaking at year 2 or 3 can easily reach $15,000–$28,000 on a $600,000 mortgage. On a variable-rate mortgage, the break penalty is capped at three months' interest — typically $4,000–$6,000 on the same balance.
If there's any chance you'll need to break your mortgage early — selling the home, refinancing for renovations, relationship change — this penalty math should be part of your decision, not an afterthought.
In the current environment where the fixed-variable spread is narrow (~65 bps), the case for variable is less compelling than it was when spreads were 100–150 bps. Many borrowers are opting for a 3-year fixed: meaningful payment certainty, without locking in for 5 years if rates improve materially by 2029.
Decision 4: should you renew early with blend-and-extend?
Blend-and-extend is a pre-maturity option your current lender may offer. Instead of waiting for your term to end and then renewing, you blend your existing contract rate with a new market rate — the math produces a weighted average based on time remaining — and extend your term (typically back to 5 years).
When blend-and-extend makes sense
The appeal: you lock in a lower rate now without paying a prepayment penalty for breaking your mortgage early. If rates are clearly below your current contract rate and you believe they won't fall much further before your maturity date, blending can save money.
Only your current lender can offer you a blend-and-extend. You cannot shop around. And the rate your lender uses for the "new market rate" portion of the blend is typically their posted or current rate — not the best rate available on the market. In practice, blend-and-extend rates at Big 6 banks tend to run 0.20–0.40% above what a monoline or credit union would offer for the same term.
When it doesn't
If you have more than 12–18 months left on your term, the blended rate moves very little (the high existing rate dominates the weighted average for a long time). The math rarely works with a long runway remaining.
If you're within the 120-day penalty-free window, wait for maturity and shop the market properly. You get rate certainty through a rate hold and access to every lender, not just your current one.
The one case for blend-and-extend: you're 6–12 months from maturity, rates have fallen meaningfully below your contract rate, and you've calculated that the blended rate at your current lender beats the best available market rate after factoring in any switching costs. This is a real scenario — just verify the math before committing.
Decision 5: should you extend your amortization?
For borrowers facing a significant payment increase, extending the amortization period at renewal can partially or fully offset the shock. But the rules differ significantly between insured and uninsured mortgages — and most articles get this wrong.
Insured mortgages (original down payment under 20%)
If your mortgage is CMHC-insured (or Sagen/Canada Guaranty), you cannot extend your amortization at renewal. The lender is required to confirm the original remaining contractual amortization with the insurer and maintain it. Your remaining amortization at renewal is your remaining amortization — full stop.
Exception (December 15, 2024): First-time homebuyers and buyers of newly built homes can now access 30-year amortization on insured mortgages. If you originally took a 30-year insured mortgage under this rule, that 30-year structure carries through.
Uninsured mortgages (20%+ equity at origination)
You can extend your amortization back up to the original contractual maximum (25 or 30 years) at renewal. Some lenders allow extension beyond the original maximum if you've built sufficient equity. Functionally, this resets the amortization clock and reduces your monthly payment — at the cost of paying more total interest over the life of the mortgage.
| Scenario | Remaining amort. | Extended to | Monthly payment relief | Extra total interest |
|---|---|---|---|---|
| $500K balance, 4.0% | 20 years left | 25 years | ~$240/month less | ~$43,000 more |
| $600K balance, 4.0% | 18 years left | 25 years | ~$380/month less | ~$67,000 more |
For cash-flow-constrained borrowers, amortization extension can be a meaningful relief valve — it's a legitimate tool, not a failure. The trade-off is real, but so is the monthly breathing room. Make the decision with the numbers in front of you, not based on a general principle about "paying more interest."
Decision 6: switch vs. refinance — getting cash out
This is the source of significant confusion at renewal. Many Canadians assume they can access their home equity when they renew. You cannot — not through a straight switch. Here's the distinction that matters:
| Straight switch | Refinance | |
|---|---|---|
| Stress test required | No (post-Nov 2024) | Yes |
| Loan amount change | No — same balance | Yes — up to 80% LTV |
| Amortization change | No — same remaining | Yes — can extend |
| Cash out | No | Yes |
| Costs | $700–$1,800 (often covered) | $1,000–$3,500+ in legal fees, possible appraisal |
| Purpose | Better rate at maturity | Access equity, debt consolidation, amortization reset |
A refinance at renewal — borrowing more — is structurally a new loan. You need to qualify with the stress test, provide updated income documentation, and typically get a new appraisal. The process takes longer and costs more than a simple switch, but it's the only way to access equity without a mid-term break penalty.
If your plan is to consolidate high-interest debt or fund a renovation, a refinance at renewal is the right moment — you're already renegotiating the mortgage, so you avoid a mid-term penalty. Just be clear going in that it requires full requalification.
What happens if you miss the renewal deadline
Your mortgage does not expire. This is a common source of anxiety — and a common misconception that lenders benefit from. Here's what actually happens if you do nothing:
Your lender will typically auto-renew you onto one of the following:
- A 6-month or 1-year fixed term at their posted rate — which can be 1–2% above what you could negotiate or find on the open market
- An open variable rate — more flexible (you can pay it out without penalty at any time), but also at a higher rate than a closed term
On a $530,000 mortgage, paying 1.5% above the best available rate for 6 months costs approximately $3,975. That's the price of inaction — and it keeps accruing until you act.
If you've already missed your maturity date, contact your lender or a broker immediately. You're likely on a short open term, which means you can exit or renegotiate without a penalty. The situation is recoverable — just act as soon as possible.
Mortgage broker vs. going direct at renewal
For borrowers who only want to stay with their current lender, a broker still adds value: they'll give you a market rate benchmark that you can use as your negotiation anchor. For everyone else, a broker is the most efficient way to comparison shop.
- What brokers access: 30–50+ lenders — monolines, credit unions, challenger banks, and sometimes Big 6 rates that are below what you'd get walking into a branch
- What it costs: Nothing for A-lender renewals. The lender pays the broker's commission. You pay nothing out of pocket.
- Satisfaction data: Borrowers using brokers report 49% satisfaction vs. 33% for direct bank channel, across multiple surveys
- When a broker is essential: Self-employed, irregular income, recent job change, prior credit issues, rental property — any situation where your file is non-standard
The one scenario where going direct makes more sense than brokering: if you're certain you want to stay with your current lender and have already negotiated a competitive rate. In that case, you're signing renewal paperwork, not shopping — a broker adds little incremental value at that stage.
Your renewal action checklist
- Contact your current lender and request a rate hold (locks in a rate without signing)
- Contact a mortgage broker and request a comparison quote for the same term
- Check your mortgage registration type: standard or collateral charge
- Confirm whether your insured mortgage allows amortization extension (most don't)
- Obtain at least 2–3 written rate offers from competing lenders (broker handles this)
- Compare total 5-year cost: rate × balance × term, adjusted for switching fees
- Note which lenders will cover your switching costs — and get it in writing
- Call the retention team (not general service) with your best competing offer in hand
- Ask them to match or beat it — in writing
- If they match, decide whether the convenience of staying is worth it
- If they won't match, proceed with the switch or refinance
- Sign renewal papers with your chosen lender
- If switching: provide required documents to new lender; instruct current lender to discharge
- If refinancing: provide income documentation, consent to appraisal
- New rate takes effect; confirm new monthly payment amount
- If switched: confirm discharge at old lender; confirm new registration
- Review new mortgage statement and set a calendar reminder for your next maturity date
Worked example: a Toronto homeowner renewing in 2026
Sarah and Marcus bought a $850,000 home in Toronto in March 2021, putting 20% down. They took a $680,000 mortgage at 1.89% on a 5-year fixed term, with 25-year amortization. Their term expires March 2026. Current outstanding balance: approximately $590,000. Current best offers they've collected:
Payment increase: +$567/month
Savings vs. Path A: ~$12,900
Savings vs. Path A: ~$20,100
All three paths involve a payment increase — there's no escaping the rate environment shift. But the $20,100 difference between signing the first offer and switching to the best available rate is real money. On a 5-year term, that's $335/month that stayed in the bank instead of going to the lender.
Note: Sarah and Marcus have an uninsured mortgage (they put 20% down), so the November 2024 stress test removal applies to their switch. Their mortgage is also registered as a standard charge (they're with a monoline), so the switch is a simple assignment with minimal legal cost.
The 2025–2026 renewal wave means you will likely pay more than you did for the last 5 years. That part is unavoidable. The $13,000–$20,000 gap between accepting the first offer and shopping the market is entirely within your control — and it requires about 3–4 hours of effort over 4 weeks.