Your Mortgage Renewal Timeline
| Time Before Maturity | Action |
|---|---|
| 6 months out | Start monitoring rates; reach out to a mortgage broker for comparison |
| 120 days out | Lock in rate with your current lender or a new one (no penalty) |
| 90–60 days out | Most active negotiating window; competing offers ready to submit |
| 30 days out | Decision should be finalized; paperwork being processed |
| Maturity date | Mortgage renews — if nothing signed, automatic renewal kicks in |
| Past maturity | Automatic renewal rate applies; still can switch, but no penalty savings |
The 120-Day Early Renewal Window
Under federal mortgage regulations, your lender must allow you to lock in a rate up to 120 days before your maturity date without penalty. This gives you a rate guarantee while rates could still move.
How it works:
- Call or log in 120 days before maturity
- Lock the current 5-year (or other term) rate
- If rates rise before maturity: you are protected
- If rates fall before maturity: ask your lender if they allow a one-time rate drop (many do, once)
The early renewal catch: Some lenders roll your maturity date forward to the new 5-year start date. If you had 4 months remaining and you renew early, you are now in a new 5-year term starting 4 months early — potentially giving up future negotiating leverage. Read the offer carefully.
What Your Lender Sends You at Renewal
Most renewal offers arrive by mail or email 3–5 months before maturity. They typically include:
- A few term options (1-year, 3-year, 5-year fixed; sometimes variable)
- Rates that are above the negotiated or broker market
- A “sign here” instruction that implies you should accept immediately
Do not sign this immediately. The renewal letter is an opening offer, not a final one.
How to Negotiate Your Renewal Rate
Step 1 — Get a Competing Offer
Contact a mortgage broker or two competing lenders. Get a written rate offer for the same term.
Step 2 — Present It to Your Current Lender
Call retentions or your account manager: “I have a competing offer for [X]%. My renewal offer is [Y]%. Can you match or beat this?”
Lenders’ retention teams have discretion to discount rates by 0.10–0.25% over what the initial renewal letter shows.
Step 3 — Decide: Stay or Switch
| Factor | Stay with Current Lender | Switch Lenders |
|---|---|---|
| Rate | Matched or close to market | 0.15–0.40% better |
| Switching costs | None | $800–$1,500 (legal, discharge, appraisal) |
| Time/effort | Low | Moderate (new application, documents) |
| Verdict | Good if rate is within 0.20% of market | Worth it if rate gap > switching costs break-even |
Break-even on switching:
If the new lender is 0.20% better on a $400,000 mortgage:
- Annual savings: $800
- Switching cost: $1,200
- Break-even: 18 months — worthwhile over a 5-year term
The True Cost of Switching Lenders
| Item | Typical Cost | Notes |
|---|---|---|
| Discharge fee (your old lender) | $200–$350 | Some waive for good clients |
| Legal/notarial fees | $1,000–$1,500 | Many new lenders cover this as an incentive |
| New appraisal | $300–$500 | Often waived by new lender for switches |
| Title insurance (if new lender requires) | $200–$350 | Usually part of legal fees |
| Total if lender covers legal | $200–$350 | Just the discharge fee |
| Total if you pay legal | $1,700–$2,700 | Full switching costs |
Tip: Before finalizing a switch, ask the new lender: “Do you cover legal fees for switches?” Many competitive lenders do this to win business.
FINTRAC and Identity Verification at Renewal Switch
When switching lenders, the new lender must comply with FINTRAC anti-money-laundering regulations and verify your identity. This is:
- Required by law — it is not optional
- Quick — typically just scanning a government photo ID
- Required in person or via a digital verification service
This applies even if you are an established homeowner with pristine credit. It is regulatory compliance, not a judgment on your history.
Variable vs Fixed at Renewal: The Decision Framework
Renewal is often the most meaningful rate decision you make. The choice between variable and fixed depends on:
| Factor | Lean Variable | Lean Fixed |
|---|---|---|
| Rate spread (variable vs fixed) | Variable is 0.75%+ cheaper | Spread is narrow (<0.50%) |
| Rate outlook | Rates expected to fall | Rates expected to rise or hold |
| Payment flexibility need | Can absorb payment changes | Cash flow is tight |
| Risk tolerance | Comfortable with rate uncertainty | Need predictability |
Amortization Changes at Renewal
At renewal, you can adjust your amortization. Common strategies:
| Strategy | When to Use | Result |
|---|---|---|
| Shorten amortization | Income increased since original mortgage | More of each payment goes to principal |
| Extend amortization | Payment affordability is strained | Lower monthly payment, more total interest |
| Keep same | On track, no life changes | Simplest; continue existing paydown pace |
Important: For insured mortgages (CMHC/Sagen/CG), you cannot re-extend amortization back beyond 25 years (or 30 years if first-time buyer in 2024+) without fully re-qualifying and potentially paying a new insurance premium.
Automatic Renewal: What Happens If You Do Nothing
| Automatic Renewal Feature | Details |
|---|---|
| Term | Usually 6-month or 1-year open |
| Rate | Posted rate — 0.50–1.50% above negotiated market rates |
| Flexibility | Can leave anytime without penalty |
| Best case | You sign a competitive new term immediately and the open period is very brief |
| Worst case | You forget for 3–6 months and pay well above market rate for that entire period |
Never rely on automatic renewal for longer than a few weeks.