Mortgage Rates for Renewals and Switching Lenders
\n\n\n\nWhen your mortgage term comes to an end in Canada, it's time to renew. This is one of the best chances you have to re-evaluate your mortgage and ensure you’re still getting a competitive rate. Many borrowers don’t realize that mortgage renewal time is also an opportunity to switch lenders, negotiate better terms, or make changes that better reflect their current financial situation. Whether you choose to stay with your current lender or explore other options, understanding the renewal process and knowing how to get the best rate can make a significant difference over the life of your mortgage.
\n\n\n\nWhat Is a Mortgage Renewal?
\n\n\n\nA mortgage renewal occurs when the term of your mortgage—typically 1 to 5 years in Canada—comes to an end, but you still have a remaining balance to pay. Instead of paying off the full mortgage, which most people cannot do at the end of a term, you agree to new terms to continue paying it off over the remaining amortization period.
\n\n\n\nAt this point, you have two main choices: accept your current lender’s renewal offer or shop around to find a better deal elsewhere. Most lenders send a renewal offer 21 to 30 days before your term ends, but it’s smart to start exploring your options as early as 120 days before maturity. This gives you time to compare rates, negotiate terms, and secure a rate hold without feeling rushed.
\n\n\n\nRenewal time is especially important because you don’t face prepayment penalties as you would if you broke your mortgage early. This makes it the most cost-effective time to reassess your mortgage needs.
\n\n\n\nWhy Shopping Around at Renewal Time Matters
\n\n\n\nA surprising number of homeowners simply sign the renewal form sent by their existing lender. This may seem convenient, but it can also be costly. Lenders often don’t offer their best rates to renewing customers unless they ask for them or threaten to leave. They rely on borrower inertia—knowing that many people would rather avoid paperwork or phone calls than switch providers.
\n\n\n\nBy comparing rates at renewal, you could potentially save thousands of dollars over the next term. Even a small reduction in your interest rate can make a big difference in total interest paid, especially if you still have a large balance on your mortgage. Additionally, you may find a lender offering better flexibility, more generous prepayment privileges, or features like better portability or payment frequency options that align with your lifestyle.
\n\n\n\nRenewal time is also a chance to change your mortgage structure. You might want to move from a variable to a fixed rate if interest rates are rising, shorten your term for faster payoff, or lengthen it if your cash flow is tight.
\n\n\n\nWhat Does Switching Lenders Involve?
\n\n\n\nSwitching lenders at renewal is more involved than simply signing your lender’s renewal offer, but it’s not as complicated as getting your first mortgage. The process typically includes verifying your income, checking your credit, and possibly conducting a home appraisal if required by the new lender. However, many lenders waive this requirement, especially in competitive markets or when the loan-to-value ratio is low.
\n\n\n\nYou’ll need to complete a new mortgage application and submit documents like proof of income and a void cheque. Your lawyer or notary will help discharge the old mortgage and register the new one. This legal step is standard but relatively straightforward, especially for borrowers who are not changing anything about the title of their property.
\n\n\n\nThere may be minor costs associated with switching, such as a discharge fee from your current lender (often around $200) and legal fees for registering the new mortgage. That said, many lenders offer to cover these costs as part of a promotional offer or switching incentive. Mortgage brokers can often help negotiate this on your behalf.
\n\n\n\nOverall, while switching does require a bit of time and effort, the potential savings and improved mortgage terms can make it well worth it.
\n\n\n\nHow to Qualify for the Best Renewal Rate
\n\n\n\nTo get the best rate at renewal, you need to present yourself as a low-risk borrower. This means having a solid credit score, steady income, and manageable debt. Lenders use these factors to assess how likely you are to make payments on time and how much risk they’re taking by lending to you.
\n\n\n\nYour credit score plays a major role. A score above 680 is generally the threshold for better rates, but scores over 740 may unlock access to premium offers. If your score has improved since your last mortgage application, you may be eligible for better terms.
\n\n\n\nLenders also look at your employment history. If you've been with the same employer or in the same line of work for at least two years, that's usually seen as stable. If you’re self-employed, providing detailed tax documentation and proof of consistent earnings is key.
\n\n\n\nHome equity is another factor. If your loan-to-value ratio is low—meaning you've paid down a large portion of your mortgage—you may be seen as less risky and receive more competitive offers. Lenders are also interested in your debt service ratios, which compare your income to the total of your housing and other debts. Lower ratios show that your budget isn’t stretched too thin.
\n\n\n\nImportantly, even if your financial picture hasn’t changed, you may still be able to qualify for better rates simply by shopping around. Each lender has its own pricing models, and the difference in rates can add up to thousands over the course of your term.
\n\n\n\nCan You Switch Lenders Before Your Mortgage Ends?
\n\n\n\nYes, you can switch lenders before your current mortgage term ends, but there are some important things to consider. When you break a mortgage mid-term, you're usually subject to a prepayment penalty. This is one of the main reasons people wait until their term is up to switch lenders.
\n\n\n\nIf your mortgage is with a major bank and is fixed-rate, the penalty is often calculated as the greater of three months’ interest or the interest rate differential (IRD). This can be a significant cost—often thousands of dollars. For variable-rate mortgages, the penalty is usually just three months of interest, which is typically lower.
\n\n\n\nThat said, there are situations where it still makes sense to break your mortgage early and switch. For example, if rates have dropped significantly since you first locked in your mortgage, the savings from a lower rate over time might outweigh the penalty. Or if your lender doesn't offer the flexibility or features you need, switching could be worth the cost.
\n\n\n\nBefore breaking your mortgage early, it’s essential to calculate your total penalty and compare it to how much you would save by switching. A mortgage broker or lender can help run these numbers so you can make an informed decision.
\n\n\n\nPros and Cons of Renewing vs. Switching Lenders
\n\n\n\nRenewing with your current lender is the simpler option. You typically don’t need to submit documents again, go through credit checks, or pay legal fees. It’s quick and convenient—especially if you’re happy with your lender and the rate they offer is competitive.
\n\n\n\nBut that convenience can come at a cost. Lenders may not automatically give you their best rate unless you ask for it or show that you’re considering switching. Staying with your lender may also limit your ability to adjust features like payment frequency or prepayment options.
\n\n\n\nSwitching lenders, while requiring more paperwork, opens the door to potentially better rates and terms. Many lenders cover the basic switching costs to win your business. It’s also an opportunity to reassess what you need from a mortgage and work with a provider that better suits your needs today—not just the ones you had when you first took out your loan.
\n\n\n\nUltimately, the decision depends on your comfort level with the process, the rate and features you’re being offered, and how much money you could save by switching.
\n\n\n\nWhen Should You Start Looking?
\n\n\n\nThe best time to start exploring renewal or switching options is 90 to 120 days before your mortgage term ends. This early start gives you time to compare rates, gather documents, and submit applications if necessary. Many lenders offer rate holds of up to 120 days, which protects you against potential interest rate increases while you finalize your plans.
\n\n\n\nIf you wait until your renewal notice arrives—often just 30 days before maturity—you may feel pressured to accept the offer quickly without time to shop around. Starting early gives you leverage to negotiate with your current lender and time to make a smooth transition if switching is the better option.
\n\n\n\nCosts of Switching Lenders at Renewal
\n\n\n\nSwitching lenders at renewal is typically low-cost, and many of the expenses associated with switching can be waived or covered by the new lender. Here's what may be involved:
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- A discharge fee from your current lender (usually $200–$400 depending on province and lender policy) \n\n\n\n
- Legal fees for registering the new mortgage (in most cases, the new lender covers this if you're just renewing, not borrowing additional funds) \n\n\n\n
- Appraisal fees may be required, but this is often waived if the loan-to-value ratio is low and the property is straightforward \n
In practice, most Canadians who switch lenders at renewal don’t pay much out of pocket. Many lenders offer promotional deals to attract switching customers, covering these minor fees to make the transition easier. Mortgage brokers can help you find lenders who cover these costs, or negotiate these incentives on your behalf.
\n\n\n\nWhat to Look for in a Renewal Offer
\n\n\n\nWhen your renewal offer arrives, it’s important not to focus solely on the interest rate. Look at the full package: the type of mortgage (fixed or variable), the term length, the payment frequency, and the prepayment options.
\n\n\n\nYou’ll also want to understand the penalties for breaking the mortgage early and whether the mortgage is portable (can be moved to another property if you relocate). These features can have a big impact on your flexibility in the future.
\n\n\n\nAsk yourself: Does this mortgage match my current goals and financial situation? If your income has changed, if you’re planning a move, or if you want to pay off your mortgage faster, the right structure matters just as much as the rate.
\n\n\n\nTime to Switch? Compare Renewal Rates with Dollarwise
\n\n\n\nMortgage renewal time is one of the most overlooked opportunities to save money and improve your mortgage terms. Whether you stay with your current lender or switch to a new one, the choices you make at this point can have a long-lasting impact on your finances.
\n\n\n\nStart looking early—ideally 90 to 120 days before your term ends. Compare rates, ask questions, and consider working with a mortgage broker to help you navigate your options. Switching lenders may take a bit more effort, but with today’s competitive market and incentive programs, the savings could be well worth it.
\n\n\n\nRenewal isn’t just a routine step—it’s your chance to renegotiate, reassess, and take better control of your mortgage and your financial future.
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