Mortgage Renewal Checklist: How to Get the Best Deal

Why renewal matters

Canadian mortgages are usually written with a term (often 1 to 5 years) that is much shorter than the amortization (often 25 or 30 years). When the term ends, the remaining balance must be renewed, refinanced, or paid off. At that moment — and only then — you can move your mortgage to any lender without paying a prepayment penalty.

Lenders know many customers will not shop around, and the first renewal offer is not always their most competitive rate. Even a difference of 0.25% on a $400,000 balance is roughly $1,000 a year in interest.

The renewal checklist

1. Mark your maturity date (6 months out)

Find the maturity date on your mortgage statement and set a reminder about four to six months before it. Many lenders will hold a rate for up to 120 days for a switch, so starting early lets you lock in a rate and still benefit if rates fall before your renewal date.

2. Review your situation and goals

Has your income changed? Are you planning to move, renovate, or pay the mortgage off aggressively? If you might sell within a few years, a shorter term or a variable rate with a smaller penalty could be more valuable than the lowest five-year fixed rate. If you want certainty, a longer fixed term may be worth a slightly higher rate.

3. Check your credit and documents

If you might switch lenders, the new lender will review your credit report and ask for income verification, a recent mortgage statement, and property tax confirmation. Gathering these early avoids delays.

4. Get at least three quotes

Compare your current lender's offer with quotes from at least two other lenders or a mortgage broker. Ask each for the same term and rate type so the comparison is fair, and ask about prepayment privileges — the right to make lump-sum payments or increase your payment without penalty can matter as much as the rate.

5. Use competing offers to negotiate

Your current lender may match or beat a competitor's rate to keep your business, especially if you have a good payment history. Staying avoids paperwork; switching may get you the best deal. Either way, you only find out by asking.

6. Understand switching costs

Switching at maturity carries no prepayment penalty, but there may be a discharge fee from your current lender and legal or appraisal fees with the new one. Many lenders cover some or all of these costs for switch-ins — ask for it in writing.

7. Respond before the deadline

Federally regulated lenders must send a renewal statement at least 21 days before your term ends. If you do nothing, some lenders will automatically renew you into a term that may not suit you. Make an active decision well before the maturity date.

What if you want to leave before renewal?

Breaking a mortgage mid-term usually triggers a prepayment penalty. For variable-rate mortgages, it is typically three months of interest. For fixed-rate mortgages, it is usually the greater of three months' interest or the interest rate differential (IRD), which compensates the lender for the difference between your rate and the rate they can lend at today for the remaining term. IRD penalties at large banks can be substantial, so always request an exact penalty quote before deciding.

Use renewal to reset your plan

• Keep your payment the same even if your new rate is lower — the difference goes straight to principal and shortens your amortization.
• Switch to accelerated bi-weekly payments, which add the equivalent of roughly one extra monthly payment each year.
• Make a lump-sum prepayment at renewal, when there are no annual prepayment limits, if you have savings set aside.

The bottom line

Renewal is the one point in your mortgage when you hold all the negotiating power. Start early, gather quotes, negotiate, and choose a term that fits the next few years of your life — not just the lowest headline rate. For more ways to cut your borrowing cost, read 7 Ways to Lower Your Mortgage Rate.