7 tips for mortgage renewal time

Note: This post was originally published on August 18, 2014 with 5 mortgage renewal tips but has been updated on May 27, 2025 with 2 additional tips to provide more relevant guidance.

Over 4 million Canadians are expected to renew their mortgages in 2025 and 2026, with many facing higher payments than they originally had. According to the Canada Mortgage and Housing Corporation (CMHC), 85% of the mortgages coming up for renewal in 2025 were originally signed when the Bank of Canada’s overnight rate (now at 2.75%) was 1% or lower. That’s a big jump. Mortgage rates have climbed more than 175 basis points since those pandemic lows, meaning many homeowners could see a noticeable increase in their monthly payments.

Also read: Renewing your five-year term? Expect to pay 15% more per month

That’s why it’s more important than ever to understand your renewal options to make a smart, strategic choice. Watch the video below for a quick overview, then keep reading for more useful tips.

Helpful resources for your mortgage renewal:

• Compare current mortgage renewal rates
• Use our mortgage renewal calculator to estimate your new payments
• Speak to mortgage broker for personalized renewal advice

2. Start to shop around early

Just how early can you renew your mortgage? Even if your maturity date is still months away, the early bird truly gets the worm in the mortgage renewal process.

While your current lender will likely send a renewal offer about 30 days before your term ends, you don’t need to wait. Most lenders let you start the renewal process up to 120 days before your maturity date. To take advantage of this opportunity, locate your maturity date on your mortgage contract (it may also be visible through online banking) and count back 120 days to mark the date on your calendar. Here’s why that matters:

• If your current lender isn’t offering a competitive rate, you’ll have time to start considering switching providers.
• You can get a rate hold with a new lender, usually good for up to 120 days, which protects you from rate increases while you weigh your choices.
• It gives your mortgage broker time to shop the market, line up paperwork, and get everything ready before your renewal date hits.

3. Ask for a better mortgage rate

With those little mortgage renewal slips, lenders make it too easy for you to answer the "should I renew my mortgage now?" question by providing a quick and easy way to renew. It’s tempting to sign and return it without a second thought, but doing so could cost you thousands. While these initial offers might include a small discount off the lender’s posted rate, they rarely reflect the best rates available in the market.

Let’s say your mortgage is up for renewal next month, and you’re coming off a 5-year fixed rate of 2.99%. Your lender offers you 4.97% for your next term. But you shop around and find another lender offering 3.99%.

Here’s how that plays out on a $500,000 mortgage with a 25-year amortization:

By switching lenders and securing a lower rate, you’d save $274 ($547-273) every month, or $16,440 over the next 5 years. You can use our renewal calculator to see how different rates can impact your monthly payments.

Many borrowers who choose to switch to a new lender at renewal time may also dodge the mortgage stress test. As of December 15, 2024, Canada’s banking regulator, OSFI, announced that borrowers switching mortgage providers would be exempt from the stress test as long as their mortgage size and amortization don’t change.

4. Get a rate hold

When you shop around for a better rate, a good strategy is to use a mortgage broker and get a rate hold. Approaching multiple lenders individually can be time-consuming and may negatively impact your credit score if too many hard inquiries are made on it. Instead, a broker can pull your credit report just once and present you with a range of competitive offers. They’ll also tell you exactly what rate you might qualify for if you decide to switch lenders.

If you aren’t ready to make a decision right away, for example, you want time to let your current lender match the offer, ask your mortgage broker for a rate hold. A rate hold protects you from interest rate increases for up to 120 days. If interest rates go down during that time, don’t worry; you can negotiate down to that new lower rate, too. This means you get the best of both worlds: security against rising rates and flexibility to benefit from falling ones.

5. Give yourself time to switch lenders

Switching lenders at renewal takes more prep than simply signing a letter. That’s why it’s important to start early — ideally 120 days before your renewal date. When you switch lenders, you’ll need to apply as if it’s a brand-new mortgage. That means submitting documentation like: 

• Copy of your mortgage renewal letter
• Proof of income
• Proof you own your home
• Proof of property insurance

In some cases, the new lender may require a professional appraisal of your property to confirm its current market value.

You also need to factor in certain fees that come with switching lenders:

• Discharge fees: Your current lender may charge a fee to release your existing mortgage.
• Appraisal fees: Costs associated with having your property professionally appraised.
• Legal fees: Fees for a lawyer or notary to handle the transfer and registration of the new mortgage.

However, some lenders may cover the cost of these fees in exchange for winning your business.

6. Reconsider your mortgage type

Renewal time is your chance to reassess what type of mortgage actually works best for you now. If you’ve been in a fixed-rate mortgage, you might automatically assume you should stick with it. But depending on your financial goals and how interest rates are moving, switching between fixed and variable could make more sense this time around.

Fixed-rate mortgages offer stability, making sure your rate and payment won’t change during the term. This is ideal if you’re risk-averse or need predictable payments. Variable-rate mortgages, on the other hand, tend to start lower and may save you money over time if the Bank of Canada continues cutting rates. The tradeoff is that your payments can fluctuate with market conditions.

You might also consider the following options:

•  A shorter term (e.g. 2- or 3-year fixed) if you think rates will keep falling.
• A convertible mortgage if you want flexibility to switch between rate types later.
• A hybrid mortgage that splits your loan into both fixed and variable components.

Watch this video for more tips on choosing the right mortgage in today’s market.

7. Be cautious with mortgage-linked insurance

When you renew your mortgage, your lender might offer you life or disability insurance tied to your mortgage. Mortgage-linked insurance is designed to pay off your remaining mortgage balance if something happens to you. But unlike individual life insurance, the payout goes directly to the lender, not your family. And the coverage shrinks as your mortgage balance declines, even though your premiums stay the same.

You also lose flexibility. The policy usually can’t be transferred to a new lender or used to cover other expenses. If you want broader protection and more control over how the money is used, you can consider a personal life insurance policy.

Also read- The differences between mortgage default insurance and mortgage life insurance

The real cost of doing nothing at renewal

If you simply sign your lender’s renewal slip without comparing offers, you could be costing yourself thousands over your next term. That’s because doing nothing leaves you exposed to interest rate risk – the financial strain that comes from renewing at a higher rate than before. For many homeowners coming off ultra-low pandemic rates, this can mean a major jump in monthly payments.

Interest rate risk occurs in three scenarios for homeowners in Canada, wherein rising interest rates affect them immediately:

• If you have a variable-rate mortgage: Your interest rate and possibly your payment amount fluctuates with market rates. When interest rates rise, your payments can increase significantly.
• If you have a fixed-rate mortgage coming up for renewal: You may have to renew at a higher rate if market rates have increased since you first took out your mortgage. This can lead to higher monthly payments.
• If you have a home equity line of credit with a variable interest rate: As rates rise, the cost of borrowing against your home's equity increases, affecting your overall financial obligations.

The bottom line

Renewing your mortgage can be quick and easy with your current lender. However, signing that renewal slip and sending it back won’t get you the best mortgage rate or product. By following these tips, doing your research, and working with a mortgage broker who can provide you with mortgage renewal advice and tips, you’ll get the best lender, terms, and rate for your current financial situation.

Also read:

• Renewing your mortgage in 2025? Here’s what to expect
• The ultimate mortgage renewal guide
• OSFI drops stress test requirement for uninsured mortgage renewal switches
• Can I afford a million-dollar home?
• Should you switch from a variable-rate to a fixed-rate mortgage?