Mortgage Renewal: How to Get Better Terms

A mortgage renewal is when your term ends and you choose new terms and a new rate. Signing the first offer is easy, but shopping around usually pays off.

By Promissory.ca Editorial Team Reviewed against official Canadian sources Last updated: 2026-09-16

What a mortgage renewal is

At the end of your mortgage term, the loan does not disappear. The remaining balance continues, and you choose new terms, a new rate and sometimes a new lender. That decision point is the renewal. It is one of the few moments when you have real leverage, because the balance is large and both your current lender and others want your business.

The renewal date is not a deadline you can ignore. If you do nothing, your lender may automatically roll you into a new term, often at its posted rate rather than a discounted one. That default path is rarely the best deal.

Term and amortization, one more time

The term is the period your current rate and conditions cover, often a few years. The amortization is the full schedule over which the loan would be paid off if you made every payment. At renewal you are renegotiating the term, not restarting the amortization, though you can choose to change the amortization if the lender agrees.

Because the term is short relative to the amortization, a renewal happens several times over the life of a mortgage. Each one is a chance to adjust your rate type, payment frequency and prepayment privileges.

The renewal offer letter

Your lender usually sends a renewal offer before the term ends. It states the new rate, term and conditions, and often includes a deadline by which you must respond. Read it carefully rather than treating it as routine. Check the rate, the term length, whether the rate is fixed or variable, and the prepayment terms.

A posted rate in a renewal letter is a starting point, not a final offer. Lenders routinely have room to improve the rate for borrowers who ask or who present a competing offer.

Why you should shop around

Loyalty is not always rewarded in mortgage pricing. A lender may reserve its sharpest rates for new customers while offering existing borrowers a higher renewal rate, betting that most will sign without comparing. Spending an hour comparing options can be worth far more than the time it takes.

You do not need to switch to benefit. Simply gathering a competing offer often gives your current lender a reason to match or beat it. The key is to ask before the renewal deadline, not after.

Renewing versus switching

Renewing means staying with your current lender on new terms. Switching means moving the mortgage to a different lender. A switch usually involves a new application, a credit check, an appraisal or property valuation, and legal work to discharge the old charge and register the new one.

The trade off is straightforward. Staying is simpler and cheaper in the short run. Switching can secure a better rate or features, but the savings have to outweigh the cost and effort. Run the numbers before deciding.

The stress test and requalification

Under OSFI Guideline B-20, federally regulated lenders qualify borrowers at a minimum qualifying rate, the greater of the contract rate plus two percentage points or 5.25%. Staying with your existing lender at renewal is often handled more simply than moving to a new federally regulated lender, which may require you to requalify under the stress test.

This matters if your income has changed since you first borrowed. A borrower who no longer meets the test might be better served by negotiating with the current lender rather than applying elsewhere. Check both paths before you commit.

Negotiating with your current lender

Negotiation works best when you are informed and specific. Know what competing lenders are offering, know your remaining balance and equity, and be ready to move if the answer is no. Ask for a better rate, and ask about the other terms too, because a slightly higher rate with generous prepayment privileges can be worth more than a marginally lower rate with none.

Do not accept the first number. A single phone call or message asking whether the rate can be improved frequently changes the outcome.

A step by step renewal plan

1. Mark your renewal date on the calendar and start about four to six months ahead.
2. Read your current mortgage documents and note the prepayment terms and any penalties.
3. Compare rates and terms from several lenders, including your current one.
4. Check whether a switch would require requalification under the stress test.
5. Ask your current lender to match or beat the best competing offer.
6. Weigh rate, term, penalty rules and prepayment privileges together, not rate alone.
7. Confirm the decision in writing well before the deadline.

Fees and costs on a switch

A switch is rarely free. Expect possible discharge fees from the old lender, a property valuation, and legal or registration costs with the new one. Some lenders run promotions that cover part of those costs, which can tip the decision. Add up the total cost, then compare it with the interest you would save over the new term. If the saving does not clearly exceed the cost, staying may be the better choice.

Timing matters

Renewal deadlines can be tight, and switching takes time. Starting early gives you room to compare, negotiate and complete the paperwork without pressure. If you leave it too late, you may be forced into the lender default offer by default rather than by choice.

One more point worth checking: if your mortgage sets out interest but does not state an annual rate, the Interest Act limits the interest that can be charged to 5% per annum. That is an old protection, but it is another reason to make sure your renewal documents clearly state the rate you are agreeing to.

Promissory.ca is not a lender or a mortgage broker and charges consumers no fee; it may receive compensation from lending partners. A licensed mortgage professional can help you compare renewal and switch options.