Mortgage renewal in Canada: what to do when your term ends

What happens at renewal, how to get the best rate, whether to switch lenders, and the biggest mistakes Canadians make at renewal.

Every Canadian mortgage has a term — typically 5 years — after which the full balance comes due and must be renewed or paid off. Mortgage renewal is one of the most important financial decisions you will make repeatedly as a homeowner, yet most Canadians simply sign whatever their bank sends them without shopping around. That mistake can cost tens of thousands of dollars over the life of a mortgage. This guide covers exactly what happens at renewal, how to get the best rate, and the strategies that save the most money.

What is mortgage renewal in Canada?

When your mortgage term ends your lender does not automatically continue your mortgage on the same terms. Instead the outstanding balance becomes due and you must either pay it off in full (rare) or renew the mortgage for a new term.

Renewal is not the same as refinancing:

• Renewal: same mortgage amount, new term and rate — no stress test required if staying with the same lender
• Refinancing: changing the mortgage amount, accessing equity, or changing amortization — stress test required, new application needed

Key point: If you stay with your existing lender at renewal you do NOT need to pass the OSFI stress test again. If you switch lenders at renewal you DO need to pass the stress test. This is one of the most misunderstood rules in Canadian mortgage lending.

When does renewal happen?

Your lender is required to send you a renewal notice at least 21 days before your term ends. In practice most lenders send renewal offers 4–6 months before maturity to lock you in early.

Important dates to know:

• 6 months before maturity: start shopping rates and comparing lenders
• 4 months before maturity: most lenders allow you to lock in a rate hold
• 21 days before maturity: minimum notice your lender must give you
• Maturity date: your term ends and new term begins

Do not wait until the last minute. The best renewal rates require time to negotiate and arrange alternative financing if needed.

The biggest mistake Canadians make at renewal

Studies consistently show that the majority of Canadian mortgage holders simply sign and return the renewal offer their lender sends them without negotiating or shopping around. This is one of the most expensive financial mistakes a homeowner can make.

Why lenders send below-market renewal offers

Your lender knows you are busy, that switching feels complicated, and that most people will not bother to shop around. They send you a posted rate offer knowing a significant percentage will sign it without question. The posted rate is almost never the best available rate.

How much this costs

On a $500,000 mortgage balance, the difference between a posted rate of 5.89% and a negotiated rate of 5.29% is approximately $250/month or $15,000 over a 5-year term. That is money left on the table for doing nothing.

How to get the best rate at renewal

Step 1 — Start early (6 months out)

Begin monitoring rates 6 months before your maturity date. Sign up for rate alerts on Ratehub.ca or RateComparison.ca. Know what the market rate is before your lender contacts you.

Step 2 — Get competing offers

Contact at least 2–3 other lenders or a mortgage broker before responding to your current lender. A broker can get you quotes from 30+ lenders with one application and one credit check. Having a competing offer in hand is the most powerful negotiating tool.

Step 3 — Negotiate with your current lender

Call your lender's mortgage retention department (not the branch — the retention team specifically) and tell them you have a competing offer. Say exactly: "I have received a better rate from another lender. What is the best rate you can offer me to stay?" Most lenders will improve their offer significantly rather than lose your mortgage.

Step 4 — Decide whether to stay or switch

Compare the final offers with your current lender versus switching. Factor in:

• Rate difference over the full term
• Any switching costs (legal fees, appraisal)
• Whether switching triggers a stress test
• Your plans for the property over the next term

Step 5 — Lock in a rate hold

Once you have identified your best option, lock in a rate hold for 90–120 days. This protects you if rates rise before your maturity date.

Should you switch lenders at renewal?

Switching lenders at renewal can save money but comes with considerations.

Reasons to switch

• Another lender offers a significantly better rate (0.20% or more)
• Your current lender has poor service
• You want different mortgage features (prepayment privileges, portability)
• You want to consolidate debt into your mortgage (requires refinance)

Reasons to stay

• The rate difference is small (under 0.15%)
• Switching requires passing the stress test and you are concerned about qualifying
• Your financial situation has changed (job change, income reduction) since your original mortgage
• You value the relationship and service of your current lender

Switching costs to factor in

Most lenders cover switching costs (legal fees, appraisal) for borrowers they want to attract. Ask specifically if your new lender will cover these costs — many will. Be aware that breaking a mortgage mid-term is different — see our guide on how to break a mortgage in Canada.

Fixed vs variable at renewal

Renewal is also the time to reconsider whether fixed or variable makes sense for the next term. The same considerations apply as when you first took out your mortgage but your situation may have changed. For a deeper comparison, read our fixed vs variable mortgage guide.

Choose fixed at renewal if

• Rates have fallen significantly and you want to lock in the lower rate
• Your income or employment situation is less stable than before
• You are closer to paying off the mortgage and want certainty

Choose variable at renewal if

• Rates are near a peak and expected to fall during your next term
• You have built significant equity and are financially comfortable with payment fluctuation
• You may sell the property within the next term (lower variable penalty)

Renewal vs refinancing — which do you need?

If you just want to continue your mortgage at a new rate, that is renewal. But renewal time is also a natural opportunity to consider refinancing if your needs have changed.

Consider refinancing at renewal if:

• You want to access home equity for renovations or investments
• You want to consolidate high-interest debt into your mortgage
• You want to change your amortization period
• You want to add or remove a borrower from the mortgage

Refinancing at renewal avoids the penalty you would face for refinancing mid-term since your term is ending anyway. However refinancing always triggers a new full mortgage application and stress test.

Calculate your renewal payment

Use Smart Mortgage Calculator to paste any Realtor.ca, Zolo, or MLS listing URL to see current payment estimates at today's rates — useful for understanding what your renewal payment might look like if you are renewing soon.

Frequently asked questions

Mortgage renewal terms and lender policies vary. This article reflects standard Canadian practices as of May 2025. Always compare rates from multiple sources before signing a renewal.