Mortgage guide
Mortgage renewal: how to get a better deal when your term ends
By Mark Herman, Calgary mortgage broker, MBA in Finance. Last updated .
When your mortgage term ends, you can renew with your current lender, switch to another lender, or change your mortgage features. The best time to start is about 120 days before your maturity date, because many lenders can hold a rate for roughly that long. Do not simply sign the first renewal offer you receive. Compare it with other lenders and look at the full terms, not just the rate.
What happens when your mortgage term ends?
Most Canadian mortgages have a term, often five years, that is shorter than the amortization. When the term ends, the remaining balance is still owed and you need a new contract. Your lender will usually send a renewal statement before maturity. Federally regulated lenders must send it at least 21 days before the end of your term, according to the Financial Consumer Agency of Canada.
If you do nothing, some lenders may automatically renew you, sometimes into a term or rate that is not ideal. Do not count on a grace period after maturity to switch without cost; any such window depends on your lender and contract, so act before your maturity date. Renewal is the one point in your mortgage when you can usually move your balance to another lender without a prepayment penalty, so it is worth treating as a decision rather than paperwork.
Why start 120 days early
Starting around 120 days before maturity gives you time to compare offers, gather documents, and let a new lender complete its approval without rushing. Some lenders offer renewal or switch rate holds of up to about that length, but hold periods vary by lender and product, so there is no universal 120-day hold. A rate hold can protect you if rates rise while you are shopping, and some lenders will adjust to a lower rate if rates fall before closing.
Leaving it to the final weeks often means signing whatever your lender offers because there is no time to switch. A switch typically requires a new application, income documents, and sometimes an appraisal, so a few months of lead time matters.
Renew with your lender or switch?
Staying with your current lender is simple, and sometimes their offer is competitive. Other times, the first offer is higher than what the same lender would give a new client. A broker can compare offers from multiple lenders and show you whether your current lender's offer is fair.
Switching lenders at maturity can save money, but compare all costs. Some lenders cover legal and appraisal costs on a straight switch; others do not, and discharge or registration fees may still apply. A switch is not automatically cost-free, so ask for every cost in writing. Look at prepayment privileges, portability, and how penalties are calculated if you might sell or refinance during the next term. A slightly lower rate can be outweighed by a restrictive mortgage.
Qualification also matters. In many cases, a straight switch at renewal with no increase in the balance has been treated more simply than a new mortgage, but lender policies vary and can change. If your income or credit has changed, ask early so there are no surprises.
Can you negotiate your renewal rate?
Yes. A renewal offer is an offer, not a final price. Lenders know that borrowers can move at maturity, and having competing quotes gives you something concrete to compare against. A broker can gather those quotes and show whether your lender's offer is competitive.
Negotiation is about more than rate. Ask about prepayment privileges, portability, penalty calculations, and fees. A small rate difference can matter less than flexibility if your plans may change.
What can you change at renewal?
Renewal is a natural time to adjust your mortgage. Depending on the lender, you may be able to change the term length, switch between fixed and variable, change payment frequency, or make a lump-sum payment before the new term starts. Extending the amortization lowers payments but usually increases total interest and may require qualification.
Adding money, adding a co-borrower, or removing someone from title usually means a refinance or new application rather than a simple renewal, with full qualification and possible legal costs.
Renew or switch: side-by-side
The right choice depends on the offers you receive and your plans for the next term. This table summarizes the trade-offs FCAC describes.
| Factor | Renew with current lender | Switch to a new lender |
|---|---|---|
| Approval | Usually simpler; existing relationship | New lender must approve your application and may use different criteria |
| Prepayment penalty at maturity | None at the end of the term | None at the end of the term |
| Costs | Usually minimal | Possible discharge, registration, appraisal and admin fees; ask whether the new lender covers some or all |
| Rate | Negotiable; the first offer may not be the lowest | Competing offer may be lower; compare total cost |
| Collateral charge mortgages | No change | May require extra fees and paying out other loans secured by the charge |
Fixed or variable at renewal?
A fixed rate keeps your interest rate the same for the term, which makes budgeting predictable. A variable rate moves with the lender's prime rate, which is influenced by the Bank of Canada's policy rate. Variable mortgages often have lower penalties for breaking the mortgage early, typically three months' interest, while fixed penalties can be calculated using an interest rate differential that may be much larger.
The right choice depends on your budget cushion, how long you plan to keep the property, and how you feel about payment changes. Shorter fixed terms can also be useful if you expect to sell or refinance. We do not predict where rates will go; instead, we compare scenarios so you can see how each option behaves if rates rise or fall.
Common renewal mistakes to avoid
The biggest mistake is not comparing at all. Others include choosing a term only by rate without checking penalties, renewing into a longer term when you plan to sell soon, and missing the chance to restructure. Renewal is a natural time to consider adjusting amortization, adding a lump-sum payment, or reviewing whether a refinance makes sense.
Read the renewal contract carefully, confirm the payment amount and frequency, and keep a copy. If anything is unclear, ask before signing.
Get pre-approved or call (403) 681-4376.
By Mark Herman, Calgary mortgage broker, MBA in Finance. Last updated . Calgary mortgage broker with 22+ years of experience. General information, not a mortgage approval or personalized financial advice.
Frequently asked questions
When should I start my mortgage renewal?
Start about 120 days before your maturity date. That gives you time to compare lenders and complete a switch. Some lenders offer rate holds of up to about that length, but hold periods vary by lender.
Is there a penalty to switch lenders at renewal?
At the end of your term you can generally move to another lender without a prepayment penalty. There may still be legal, appraisal, or discharge costs, which some lenders cover.
Will my lender automatically renew my mortgage?
Some lenders may automatically renew if you do not respond, possibly into a term you would not have chosen. Review your renewal statement and respond before the deadline.
Should I choose fixed or variable at renewal?
It depends on your budget cushion, plans for the property, and comfort with payment changes. Compare penalties and run scenarios for rising and falling rates before deciding.
Can I add money to my mortgage at renewal?
Yes, but increasing the balance is usually treated as a refinance, which requires full qualification and may have costs. Ask about your options before your maturity date.
Can a broker help if I want to stay with my bank?
Yes. A broker can show you what other lenders are offering so you know whether your bank's renewal offer is competitive, even if you decide to stay.
What happens if I do nothing at renewal?
Your lender may automatically renew you, possibly into a term or rate you would not have chosen. Do not assume a penalty-free window after maturity; review your statement and decide before the deadline.
Can I break my mortgage early to get a better rate?
Usually, but there is typically a penalty. Fixed mortgages often charge the greater of three months' interest or an interest rate differential, and calculations are lender specific. Get a written quote before deciding.
What documents do I need to switch lenders at renewal?
Expect income documents, a current mortgage statement, photo ID, and property tax details. The new lender may also order an appraisal. Requirements vary by lender.
Do I have to pass the stress test to switch at renewal?
Rules have changed in recent years, and a straight switch with no added money may be treated differently from a new mortgage. Lender policies vary, so confirm with the lender or your broker before you plan around it.