If your mortgage term ends in the next few months, you’ve probably received, or soon will receive, a renewal offer from your lender. Many Toronto and GTA homeowners simply sign it and move on. That can be an expensive mistake. Renewal is one of the few times you can change lenders, renegotiate your rate and restructure your mortgage without paying a prepayment penalty.
Here’s what you need to know to make the most of your renewal.
Why Renewal Matters More Than Ever
A large wave of Canadian mortgages signed during the low-rate years of 2020 to 2022 is now coming up for renewal. For many homeowners, the new rate will be noticeably different from the one they started with, and so will the monthly payment. Even a small difference in rate adds up: on a $600,000 mortgage, a rate that is 0.25% lower saves roughly $1,500 in interest in the first year alone.
Your current lender knows that most borrowers don’t shop around. Their first renewal offer is often not their best rate.
The Big Change: Switching Lenders Is Now Easier
Until late 2024, homeowners with an uninsured mortgage (usually those who put down 20% or more) had to re-qualify under the federal mortgage stress test to move their mortgage to a new lender at renewal. If your income had dropped or your debts had grown, you could be stuck with your current lender’s offer.
As of November 21, 2024, the federal banking regulator (OSFI) removed that requirement for straight switches. You can now move your mortgage to a new federally regulated lender at renewal without re-qualifying at the stress test rate, as long as you keep the same loan amount and amortization schedule. Insured mortgages already had this flexibility.
In short: you have more negotiating power at renewal than you used to.
When You Should Start Planning
- 4 to 6 months before maturity: review your finances and goals. Do you want lower payments, faster payoff, or access to equity?
- Around 120 days before: many lenders let you secure a rate up to 120 days ahead. Getting a rate hold protects you if rates rise, and you can usually still take a lower rate if they fall.
- When your renewal offer arrives: federally regulated lenders must send it at least 21 days before your term ends, but most send it much earlier. Don’t sign it right away. Use it as a benchmark.
- 2 to 4 weeks before: make your final decision so there’s time for paperwork if you switch.
Stay or Switch? How to Decide
Reasons to stay with your current lender
- They match or beat the best rate you can find elsewhere.
- You have a readvanceable mortgage or HELOC bundled with your mortgage that would be hard to move.
- You need to change your loan amount or amortization in a way that would require full re-qualification elsewhere.
Reasons to switch
- Another lender offers a meaningfully lower rate.
- You want better terms: larger prepayment privileges, a fairer penalty calculation, or portability.
- Your current lender’s penalties on fixed-rate mortgages are high. Many monoline lenders calculate penalties differently from the big banks, which can save you thousands if you ever need to break your mortgage early.
What Does Switching Cost?
Switching at renewal is usually low-cost or free. Many lenders cover the appraisal and legal fees on a straight switch. Your current lender may charge a small discharge fee, and there may be a provincial registration fee. A mortgage agent can tell you upfront what applies to your situation.
Fixed or Variable at Renewal?
There’s no one right answer. It depends on your budget, how much payment uncertainty you can handle, and how long you plan to stay in the home. A shorter fixed term can also make sense if you expect to sell, refinance or move within a few years. We’ll walk you through the trade-offs with real numbers.
Renewal Is Also a Chance to Restructure
If you want to consolidate high-interest debt, fund a renovation, or access your home equity, renewal is often the cheapest time to do it, because you won’t pay a penalty to break your term. Keep in mind that increasing your mortgage amount is a refinance, not a straight switch, so you’ll need to qualify under current rules.
Your Renewal Checklist
- Your current mortgage statement and renewal offer
- Recent pay stubs or, if self-employed, your two most recent Notices of Assessment
- Your latest property tax bill
- A list of your other debts (credit cards, car loans, lines of credit)
- Your goals: lower payment, faster payoff, or access to equity
Let Us Shop Your Renewal
As a licensed mortgage agent, we compare renewal options from banks, credit unions and monoline lenders, at no cost to you for most residential mortgages. Whether you live in Toronto, North York or Durham Region, we’ll tell you honestly whether to stay or switch.
Mortgage renewing soon? Book a free renewal review or call (647) 409-5155.
This article is for general information only and is not financial, tax or legal advice. Mortgage rules, rates and government programs change, so please speak with a licensed professional about your situation. Trilith Mortgages: Paul Oosh, Mortgage Agent, FSRA Licence #M25002936. Brokerage: Breezeful, FSRA Licence #13470.