How to switch a mortgage to another bank or lender

This piece was originally published on April 9, 2018 and updated on May 30, 2025. 

Why mortgage renewal is a good time to switch lenders

When your mortgage term ends — usually after five years — your lender will send you a renewal offer with a new rate, term, and payment schedule. It might look like a done deal, but don’t sign just yet. Renewal is your chance to re-evaluate your mortgage and get the best rate.

Here’s why switching mortgage lenders at renewal could be worth considering.

• You won’t pay a penalty: When you switch lenders mid-term, you typically have to pay a prepayment penalty – often equal to three months’ interest for variable rate mortgages and the interest rate differential (IRD) for fixed rate mortgages. But at renewal, you can move your mortgage to a new lender without paying a penalty. Your new lender simply pays off your remaining balance and takes over the loan, giving you a clean break.
• You may qualify for a better rate or terms: Don’t assume your current lender is giving you the best deal. A new lender might offer you a lower interest rate, saving you thousands in interest over the next term. You may also find more flexible conditions, like better prepayment options or less restrictive rules for breaking your mortgage early.
• You can reassess your financial needs: Renewal is a good time to think about whether your mortgage still suits your goals. Do you want to make lump-sum payments more frequently? Access equity to finance renovations or other large expenses? Change your amortization period? By exploring what other lenders can offer, you can align your mortgage with where you are now, not just where you were five years ago.

How to switch mortgage lenders at renewal

Switching mortgage lenders takes a bit of prep but with the right steps, it can lead to better rates, more flexibility, and long-term savings.

1. Start early (at least 4 months in advance)

​​Most lenders let you secure a new mortgage rate up to 120 days before your current term ends. Starting early gives you enough time to compare offers, complete paperwork, and avoid last-minute stress. It also protects you from potential rate increases, since many lenders will hold a rate for up to four months.

2. Compare mortgage rates and lenders

​​Use online comparison tools to get a sense of the best rates available. Keep in mind that renewal and refinance rates are sometimes slightly higher than rates for brand-new mortgages, due to lender risk rules. Still, even a small rate improvement can lead to meaningful savings over your next term.

3. Consider working with a mortgage broker

​​If your situation is more complex – maybe your income is unpredictable, you want to make lump-sum payments, or you’re eyeing a future move, a broker can help match you with lenders who offer a more competitive rate, with terms that fit your plans. Unlike getting a mortgage directly with a big bank, they work with multiple lenders and can flag hidden costs, like restrictive prepayment rules or steep penalties for breaking early.

4. Think about term length and rate type

Are you still comfortable with a five-year fixed term? In today’s market, many borrowers are choosing 2- or 3-year fixed terms to give themselves flexibility in case rates fall further. According to our internal shopper data, inquiries for three-year fixed rates jumped to 12% in 2025, up from 7% in 2024, showing increased interest in shorter terms. Variable rates are also becoming more attractive again, with inquiries rising to 8%, up from 5% last year. Renewal is your chance to realign your mortgage strategy with where rates (and your finances) are headed.

5. Decide if you want to access equity or get a HELOC

If you're planning a major renovation, paying off high-interest debt, or need funds for another reason, renewal is the best time to tap into your home equity. You can either:

• Refinance to take out equity (receive a lump sum and repay through your mortgage), or
• Add a HELOC, a revolving credit line tied to your home’s value

Both options require a real estate lawyer and updated paperwork; renewal is a convenient time to do so, as you’ll avoid any penalties from breaking your original mortgage contract.

What you'll need for a mortgage transfer to another bank

Once you’ve found the right mortgage, the process will look similar to when you first got your mortgage. 

Documentation

Your new lender will ask for the following documents to assess your application, verify your financial situation, and finalize the offer.

• Government-issued photo ID
• Proof of income (e.g. recent pay stubs, T4s, or NOAs if you’re self-employed)
• A current mortgage statement
• Property tax statement
• Home insurance details
• Bank statements

Appraisal (sometimes)

Some lenders may require a new property appraisal to confirm the current market value of your home, especially if you’re refinancing to access equity. This typically costs a few hundred dollars, which you’ll need to cover upfront.

Discharge and legal fees

To formally switch lenders, your current mortgage needs to be discharged and a new one registered. This involves:

• A discharge fee from your current lender (usually $200–$400)
• Legal fees for handling the paperwork and registration (typically $700–$1,000)

Some lenders may offer to cover part or all of these costs as an incentive to win your business, especially if you're switching with a sizable mortgage balance. Be sure to ask about this when comparing offers.

A real estate lawyer

You’ll need to work with a lawyer to finalize the switch. They’ll coordinate with both lenders, register the new mortgage, discharge the old one, and ensure funds are transferred correctly on your renewal date.

When it might make sense to stay with your current lender

There are some times when opting for a straightforward renewal with your current lender will make more sense, however.

• The cost of switching outweighs the savings: If the rate you're offered by a new lender only saves you a small amount each month, it might not be worth it. For example, a $25/month saving adds up to $1,500 over five years, about the same as legal and discharge fees. If you’re also paying for an appraisal or title insurance, you might actually come out behind.

• You need a fast or straightforward renewal: If you’re short on time or dealing with other priorities, accepting your lender’s offer might be the most convenient route. This option minimizes paperwork and skips the added steps of switching lenders.
• You’re bundling multiple products: If you have other financial products like a line of credit, chequing account, or investment account with your current lender, keeping your mortgage there might qualify you for package perks or easier account management.

The bottom line

If your mortgage is coming up for renewal, don’t treat it like a routine formality. It’s one of the only times you can switch lenders without a penalty — and that opens the door to better rates, improved features, or access to home equity. Start early, do your research, and treat your renewal like a fresh mortgage decision. 

Also read:

• 7 tips for mortgage renewal time
• What happens if your mortgage renewal is denied?
• How inflation affects your mortgage
• How early should I renew my mortgage?
• Paying off a mortgage at renewal? Pros, cons, and tips for 2025