Mortgage renewal process

Quick facts:

• Mortgage renewal is the perfect time to adjust your mortgage by switching to a new product, term length, or even lender — without incurring penalties.
• As of November 21, 2024, neither insured or uninsured borrowers will be stress tested if switching to a new lender at renewal time, as long as their original amortization and mortgage amount remain the same, and both lenders are federally-regulated financial institutions.
• You can start the renewal process as early as 120 days before your renewal date.
• Comparing the market or working with a pro like a mortgage broker can help you find the best mortgage rate. Did you know: that getting a mortgage rate even 0.25% lower can save a borrower $91 per month, and $1,092 per year!*
  

  *Based on a $700,000 home price, 10% down payment, amortized over 25 years, and a five-year fixed mortgage rate of 4.64% vs. 4.39%. 

When your mortgage term ends and you still have a balance to pay, it’s time to renew your mortgage. This isn’t just a routine task, it’s an opportunity to evaluate the features of your current mortgage and determine whether it’s still the best fit for your financial situation and goals. 

For example, in 2024, the Bank of Canada made four rate cuts, providing much-needed relief for borrowers after a period of elevated rates. Even more cuts are anticipated as we head into 2025, which could significantly lower borrowing costs in the months ahead. Given the prospect of lower rates in the relatively near future, you might want to think about what type of mortgage (e.g. variable vs. fixed) and what term length would make sense. 

Have a look at the video below for some tips on how mortgage renewal works, then read on for more information on the process.

1. Start shopping 4 months before your term is up

Mark your current mortgage term’s maturity date on your calendar, then count back 120 days (around 4 months) to mark when you can start preparing. This is when most lenders will let you start the early mortgage renewal process, meaning you could renew early with your current lender without having to pay a prepayment penalty (for breaking your term early). It’s also the perfect time to start exploring your options.

Even if you’re not ready to meet with your mortgage broker or lender immediately, you can use this time to find the best renewal rates, prepayment privileges, and other terms from different lenders. Look for lenders that offer rate holds—these allow you to lock in today’s rates for up to 120 days, protecting you from potential increases while you finalize your renewal. This ensures you have the flexibility to shop around while securing a competitive rate.

3. Outline your mortgage needs

Along with your other financial goals, you should make a list of what you’re looking for in a mortgage product. To start, ask yourself a few questions:

• Does your monthly budget have room for you to increase your mortgage payment amount? If so, review the monthly prepayment options in the terms and conditions. Increasing the size or frequency of your mortgage payments can help you pay down your principal faster, potentially saving thousands of dollars in interest over the course of your mortgage.
• Will you receive any bonuses or inheritances? If so, check for lump-sum prepayment options. This feature allows you to put extra funds toward your mortgage principal.
• Do you think you’ll have the option to pay off your mortgage entirely, in this next term? If so, consider the prepayment penalties that go with fixed vs. variable rate mortgages.
• Do you think you will want to borrow more money from your lender during this next term? If you may need to refinance, consider the associated penalties or explore collateral mortgages, which are designed to accommodate future borrowing needs.
• Is there any chance you’ll be selling your home and/or moving in the next 5 years? If so, you may want a mortgage that is portable or assumable to make transitions smoother and potentially save on costs.

4. Be ready to renew in the last 30 days

By law, your current lender has to send you a mortgage renewal statement at least 21 days before your term is up, but they will usually mail you a renewal offer for their lowest posted rate that is good for the 30 days before maturity. By extending that offer for 30 days, you’re protected from any potential rate increases during that time. At this stage, you should have done enough research to know if your lender’s offer is competitive. If it isn’t, don’t hesitate to negotiate. 

Keep in mind that your current lender might not provide the most favorable rate even after negotiation. To ensure you’re getting the best deal, use these last 30 days to meet with a mortgage broker, who can help you compare offers from other lenders and secure a better rate or more favorable terms.

Read: Should you switch from a variable-rate to a fixed-rate mortgage?

5. Make a decision

After shopping around, considering your financial goals, outlining your mortgage needs and receiving a mortgage renewal offer from your current lender, it’s finally time to make a decision. The last question you’ll need to ask yourself is who is offering you the best mortgage rate and product: your current lender or another lender? If you decide to stay with your current lender, you can either choose to sign and return the mortgage renewal offer they sent in the mail or sit down and try to negotiate a better offer in their offices.

Switching providers will require a little more paperwork, but you’ll find that doing so will give you access to better mortgage rates. Just be prepared to submit a mortgage application, as the new lender’s qualifying criteria might be different from that of your current lenders. Additionally, there may be fees involved with making the switch, such as:

• Appraisal fee: To verify your property’s value ($150–$500)
• Discharge fee: Charged by your current lender ($5–$395)
• Assignment fee: If applicable ($25–$300)
• Legal fee: For finalizing the transfer (up to $1,500).

Some mortgage brokers or lenders may offer to cover part or all of these fees to earn your business, but others may not, so be prepared to pay these costs upfront. Weighing the benefits of switching against these expenses will help you decide if making the move is worth it.

For further information, check out these helpful pages:

• Mortgage renewal calculator
• Mortgage renewal tips 
• Mortgage renewal denied
• What’s the difference between A-lenders and private mortgage lenders in Canada?
• Open vs. closed mortgage
• Can I get a 30-year mortgage in Canada?