Your mortgage renewal is your best opportunity to improve your rate, terms, and overall mortgage strategy — but only if you prepare. Most Canadians simply sign the renewal letter their bank sends, which almost always offers a rate above what you could get by shopping around.
These seven tips will help you get the best deal at renewal.
Tip 1: Start 120 Days Early
| Action | Why It Matters |
|---|---|
| Mark your calendar 4 months before maturity | Most lenders let you lock in a rate 120 days in advance |
| Lock a rate with your current lender or another lender | This is your “floor” — you can only improve from here |
| If rates drop between lock-in and closing, many lenders will give you the lower rate | You are protected in both directions |
The 120-Day Timeline
| Days Before Renewal | Action |
|---|---|
| 120 days | Start shopping; request rate quotes from 2–3 lenders and a broker |
| 90 days | Lock in the best available rate as your fallback |
| 60 days | Receive renewal letter from current lender; compare to your locked rate |
| 30 days | Negotiate with current lender using competing quotes; decide stay or switch |
| 0 days | Sign renewal (current lender) or complete switch (new lender) |
Starting early gives you leverage and options. Starting late leaves you signing whatever your bank offers.
Tip 2: Never Sign the First Renewal Letter
The renewal letter your bank sends is effectively their opening offer — it is not their best rate.
| What the letter offers | What you can usually get |
|---|---|
| Posted or near-posted rate | 0.25%–0.75% lower by negotiating |
| Standard term (usually 5-year fixed) | Choice of term optimized to your situation |
| No discussion of prepayment options | Opportunity to improve privileges |
What the Rate Difference Costs You
| Mortgage Balance | Rate on Renewal Letter | Negotiated Rate | Monthly Savings | 5-Year Savings |
|---|---|---|---|---|
| $300,000 | 5.24% | 4.74% | $83 | $4,980 |
| $400,000 | 5.24% | 4.74% | $110 | $6,600 |
| $500,000 | 5.24% | 4.74% | $138 | $8,280 |
| $600,000 | 5.24% | 4.74% | $166 | $9,960 |
A 15-minute phone call to negotiate can save you thousands over the term.
Tip 3: Get Competing Quotes
The most effective negotiation tool is a real competing offer.
| Source | What to Request |
|---|---|
| Mortgage broker | Quotes from multiple lenders (brokers access 30+ lenders) |
| Online-only lender | Direct rate quote (Tangerine, EQ Bank, nesto, Pine) |
| Another Big Five bank | Rate quote (useful if you are at a Big Five currently) |
| Credit union | Rate quote (sometimes offer flexible terms) |
How to Use Competing Quotes
| Step | Action |
|---|---|
| 1 | Collect 2–3 written rate quotes from other lenders or a broker |
| 2 | Call your current lender’s mortgage retention team (not just the branch) |
| 3 | Tell them you have a rate of X% from another lender and ask them to match or beat it |
| 4 | If they can’t match it, ask them what their absolute best rate is |
| 5 | Compare the best offer from your current lender against the competing offer, factoring in any switching hassle |
Pro tip: Mortgage brokers do the comparison shopping for you and have access to monoline lender rates that are not available directly. A good broker can present you with 5–10 options in a single conversation. See our mortgage broker guide for more.
Tip 4: Choose the Right Term
Renewal is the time to reassess your term length — don’t just default to a 5-year fixed.
| Term | Best When | Risk |
|---|---|---|
| 1-year fixed | Rates are expected to drop; you want flexibility | Must renew again soon; rate could rise |
| 2-year fixed | Moderate uncertainty; want to reassess sooner | Shorter rate lock |
| 3-year fixed | Balanced approach; aligns with common life changes | Less savings than variable if rates drop |
| 5-year fixed | Rate certainty matters most; planning to stay | Highest break penalties if you need to exit early |
| Variable rate | Historically saves money over fixed; comfortable with rate fluctuations | Payments change (or trigger rate hit) if rates rise |
The Historical Case for Shorter Terms
Studies of Canadian mortgage data consistently show that shorter terms and variable rates have saved borrowers money the majority of the time compared to 5-year fixed. However, the 5-year fixed provides the most predictable payments.
| Strategy | Historically cheaper? | Payment certainty |
|---|---|---|
| Variable rate | Yes (~75% of the time over 5-year periods) | Low — payments fluctuate |
| 1–3 year fixed (serial renewals) | Yes (most periods) | Medium — rate resets more often |
| 5-year fixed | No — typically the most expensive option | High — locked in for 5 years |
Your risk tolerance, income stability, and life plans should guide the decision. See fixed vs variable mortgage for a deeper analysis.
Tip 5: Review Your Total Mortgage Strategy
Renewal is not just about rate — it’s a chance to revisit your entire mortgage structure.
| Question to Ask | Why It Matters |
|---|---|
| Should I increase my payment amount? | Accelerates payoff; builds equity faster |
| Should I switch to accelerated biweekly payments? | Equivalent to one extra monthly payment per year |
| Should I extend my amortization to lower payments? | Useful if facing payment shock |
| Should I make a lump-sum prepayment? | Reduces principal before the new rate applies |
| Do I need to refinance for cash? | Renewal is penalty-free; refinancing adds costs |
| Should I consolidate high-interest debt into my mortgage? | Lower rate, but extends repayment — calculate carefully |
Payment Frequency Impact
| Frequency | Payments/Year | Annual Amount (on $400K at 4.74%) | Amortization Saved |
|---|---|---|---|
| Monthly | 12 | $25,128 | Baseline (25 years) |
| Biweekly | 26 | $25,116 | ~6 months |
| Accelerated biweekly | 26 | $27,222 | ~3 years |
| Weekly | 52 | $25,116 | ~6 months |
| Accelerated weekly | 52 | $27,222 | ~3 years |
Switching from monthly to accelerated biweekly at renewal is one of the easiest ways to save tens of thousands in interest over the life of your mortgage.
Tip 6: Stress-Test Your Budget Before Renewing
If you originally locked in at a low rate (2020–2022 era), your renewal rate will likely be significantly higher. Prepare your budget before the payment changes.
| Original Rate | Renewal Rate | Payment Increase per $100K | On $400K Mortgage |
|---|---|---|---|
| 1.89% | 4.49% | +$124/month | +$496/month |
| 2.49% | 4.49% | +$93/month | +$372/month |
| 3.29% | 4.49% | +$55/month | +$220/month |
| 3.99% | 4.49% | +$23/month | +$92/month |
Pre-Renewal Budget Checklist
| Action | When |
|---|---|
| Calculate your new estimated payment at current rates | 4 months before renewal |
| Start living on the higher payment amount now (put the difference into savings) | 3 months before renewal |
| Identify expenses to cut if needed | 2 months before renewal |
| Build a 1–2 month mortgage payment buffer | Before renewal date |
If the payment increase is severe, see our payment shock at mortgage renewal guide for detailed strategies.
Tip 7: Know When to Switch Lenders
Switching lenders at renewal is free (no prepayment penalty) for a standard transfer. A switch makes sense when:
| Scenario | Stay or Switch? |
|---|---|
| Current lender matches the best available rate | Stay — no reason to switch |
| Current lender is 0.10–0.15% higher but offers good service and features | Stay — convenience has value |
| Current lender is 0.20%+ higher than competing offers | Switch — savings are significant |
| You want features your current lender doesn’t offer (e.g., better prepayment privileges) | Switch |
| You have a HELOC/mortgage combo (collateral charge) | May need to stay — collateral charges are harder to transfer |
What Switching Involves
| Component | Who Handles It | Cost to You |
|---|---|---|
| New lender application | You (online or with broker) | Free |
| Credit check and qualification | New lender | Free |
| Appraisal (if required) | New lender orders it | Usually lender-paid |
| Legal transfer | New lender’s lawyer | Usually lender-paid |
| Discharge of old mortgage | Old lender | $200–$400 (your cost) |
| Total cost to switch | $0–$400 |
Collateral charge warning: If your current mortgage is registered as a collateral charge (common with TD, Scotiabank STEP, and some credit unions), switching requires a full discharge and re-registration, which costs $500–$1,000+ and may not be covered by the new lender. Check your mortgage registration type before assuming a free switch.
Renewal Quick-Reference Checklist
- Started shopping 120 days before renewal
- Got 2–3 competing rate quotes (broker + direct lenders)
- Did NOT sign the first renewal letter
- Called current lender’s retention team with competing quotes
- Evaluated the right term length for current situation
- Considered switching to accelerated biweekly payments
- Stress-tested budget at the new rate
- Checked whether mortgage is standard or collateral charge
- Reviewed prepayment privilege options
- Made lump-sum prepayment if beneficial before new rate takes effect