Mortgage renewal process in Canada
Key takeaways
- You can start shopping for a mortgage renewal up to 120 days before your renewal date.
- You can switch lenders at renewal without paying a prepayment penalty.
- Eligible borrowers switching federally regulated lenders don't need to pass the mortgage stress test, provided the mortgage amount and amortization stay the same.
- Comparing rates before renewing could save thousands over your next term.
What is mortgage renewal?
Mortgage renewal is the process of signing a new mortgage contract when your current mortgage term ends and you still have a remaining balance to pay. During renewal, you can keep your existing lender or switch to a new one, while also choosing a new interest rate, mortgage term, and features that better suit your financial goals.
Mortgage renewal isn't the same as paying off your mortgage. Most Canadian mortgages are paid off over an amortization period of 25 or 30 years, but the mortgage contract itself only lasts for a set term, typically one to five years. At the end of each term, you'll renew your mortgage until the full balance has been repaid.
How does the mortgage renewal process work?
Most lenders allow you to begin the renewal process up to 120 days before your mortgage maturity date. This gives you time to understand your options before making a decision and, if needed, secure a rate hold while you continue shopping. If rates increase before your renewal date, you'll keep the lower rate you've secured. Starting early doesn't mean you need to accept the first offer you receive; it gives you time to compare lenders and make an informed decision.
- Review your current mortgage: Before renewing, take a look at your current mortgage and assess whether it still fits your needs. For example, you may have received a raise, started a family, are planning to move, or want to pay off your mortgage faster. Renewal is your opportunity to adjust key features such as your mortgage term, interest rate, payment frequency, or prepayment privileges.
- Receive your lender's renewal offer: As your maturity date approaches, your current lender will send you a renewal statement outlining your proposed interest rate, mortgage term, payment amount, and mortgage features. Federally regulated lenders must provide this statement at least 21 days before your mortgage matures. Receiving an offer doesn't mean you have to accept it. Mortgage renewal gives you the flexibility to negotiate with your current lender or explore offers from other lenders.
- Decide whether to renew or switch lenders: Once you've compared your options, you'll choose whether to renew with your current lender or move your mortgage to a new one. Staying with your existing lender is generally the simplest option, while switching may require a new application and supporting documents. If you decide to switch, your new lender will usually coordinate the transfer process.
- Sign your new mortgage agreement: Once you've selected your lender and mortgage product, you'll sign a new mortgage agreement before your current term expires. Your new interest rate, payment amount, and mortgage terms will then take effect, and you'll continue making regular payments until your next renewal or until your mortgage is fully paid off.
WATCH: Ratehub's top tips for renewing your mortgage in 2026
Do mortgages automatically renew?
Many lenders include an automatic renewal clause in their mortgage agreement. This means that if you don't respond to your renewal offer before your mortgage maturity date, your lender may automatically renew your mortgage, often into a short-term fixed-rate mortgage using its standard renewal rate.
While automatic renewal ensures your mortgage remains in good standing and you don't miss any payments, it may not result in the most competitive interest rate or mortgage terms. If you want to compare lenders and negotiate your mortgage rate and features, it's important to review your renewal offer well before your maturity date and let your lender know how you wish to proceed.
Should you stay with your lender or switch at renewal?
When your mortgage comes up for renewal, you can either renew with your current lender or move your mortgage to a new one. Staying is usually simpler, while switching can give you access to more competitive rates, features, or incentives.
| Renew with your current lender | Switch to a new lender | |
| Process | Usually faster and simpler. | Requires a new application and some additional paperwork. |
| Interest rates | May offer a competitive rate, but the first offer isn't always the best. | Generally provide access to lower rates by shopping across multiple lenders. |
| Mortgage features | Limited to your lender's available products. | Wider selection of mortgage terms, rate types, and features. |
| Qualification | Minimal paperwork in most cases. | Income, employment, and other supporting documents may be required. |
| Costs | Typically no transfer-related costs. | Some lenders cover appraisal, legal, or switching fees. |
| Mortgage stress test | Not required for a standard renewal. | Eligible borrowers switching federally regulated lenders at renewal are generally exempt, provided the mortgage amount and amortization remain unchanged. |
| Best for | Homeowners who receive a competitive offer and are happy with their lender. | Homeowners looking for a better rate, more flexibility, or improved mortgage features. |
Don't assume your lender's renewal offer is the best one. Before signing, compare offers from other lenders to see whether you could qualify for a lower rate or better mortgage features. Your lender's first renewal offer isn't always its most competitive, and many lenders are willing to negotiate to keep your business. If you receive a better offer elsewhere, ask your current lender if they'll match or improve it before deciding to switch.
Can your mortgage renewal be denied?
In many cases, a straightforward mortgage renewal with your current lender won't be denied, provided you've continued making your mortgage payments and you're not requesting significant changes to your mortgage. However, your renewal may be denied if:
- You've missed mortgage payments or have a history of late payments.
- Your financial situation has changed significantly, such as a loss of income or increased debt.
- Your mortgage is in default or you're behind on property taxes.
- You want to make major changes to your mortgage, such as increasing the mortgage amount or extending your amortization, which may require you to requalify under the lender's current approval criteria.
If your lender declines to renew your mortgage, you may still have other options. You can apply with another lender or work with a mortgage broker to explore alternative financing with B lenders, although these mortgages typically come with higher interest rates and are generally intended as short-term financing solutions.
Ratehub’s mortgage renewal checklist
Before signing your renewal agreement, use this checklist to make sure you're choosing the right mortgage for your needs, and not just accepting the first offer you receive.
- Have you compared mortgage rates? Don't assume your lender's first renewal offer is the best available. Compare mortgage renewal rates from multiple lenders to see if you could qualify for a lower rate or use competing offers to negotiate a better deal. Shopping around could save you thousands over your mortgage term.
- Have you chosen the right interest rate type? Consider whether a fixed or variable mortgage rate best suits your budget, risk tolerance, and expectations for future interest rates.
- Is the mortgage term right for you? A shorter term may offer lower rates but requires renewing sooner, while a longer term provides greater payment certainty. Choose a mortgage term that aligns with your financial goals and future plans.
- Do your mortgage features still meet your needs? Review features such as prepayment privileges, payment flexibility, portability, and penalties for breaking your mortgage early. The lowest rate isn't always the best mortgage if it comes with restrictive terms.
- Do you want to pay off your mortgage faster? Renewal is an opportunity to increase your payment amount, make a lump-sum payment, or shorten your amortization if your budget allows. These changes can help you reduce your interest costs and become mortgage-free sooner.
- Does switching lenders make financial sense? If another lender offers a lower rate, better mortgage features, or cash incentives, switching could save you money over your next mortgage term. Compare the overall value, including rates, features, fees, and incentives, before making your decision.
- Will your new mortgage payment fit your budget? If interest rates have changed since you last renewed, your monthly payment could increase or decrease. Review your budget to make sure your new payment is affordable over the entire mortgage term.