Should You Renew With Your Bank?
Sometimes, yes, and I’ll be the first to tell you when. Banks send one of two very different kinds of renewal offers: an excellent rate designed to keep you, or a high rate they hope you’ll sign without talking to anyone. The letter looks the same either way, and you cannot tell which one you’re holding without comparing it against the market. So the real answer is: never sign your bank’s renewal paperwork without having someone who knows the market look at it first.
I have been arranging mortgages in Alberta since 2018, with access to 50+ lenders, and putting a renewal letter next to the market takes me a few minutes. It is free, it does not commit you to switching, and often the answer I give is that the bank got it right and you should sign.
The two kinds of renewal letters
Here’s one of the strangest things about how banks behave at renewal time. They tend to go one of two ways.
The first way: they offer you a phenomenal renewal rate, sometimes well below market, better than anything you could get elsewhere. Why would they do that? Because renewal is the cheapest possible moment for a bank to keep a customer. There are no commissions to pay, no acquisition costs, no paperwork to speak of. You’re already their client; keeping you costs them almost nothing, so they can afford to sharpen the pencil further than any competitor.
The second way: they send you a rate that’s well above what the market would give you, and they simply hope you’ll sign it. This is where the real risk sits. Lenders know that most homeowners renew without shopping around. The letter arrives, life is busy, and signing is frictionless. That convenience is the product, and some banks price it accordingly.
The problem is that both letters arrive in the same envelope, with the same friendly tone and the same signature line. On its own, a renewal offer tells you nothing about whether it’s a gift or a markup.
Renewal is your one moment of full freedom
When your mortgage term ends naturally, you can move to any lender with no prepayment penalty. That makes renewal the one point in your mortgage where you have complete leverage: you’re not locked in, you owe your current lender nothing, and they know it.
That leverage only works if you use it before you sign. The moment you sign the renewal, you’re locked into a new term, and getting out of a signed term means penalties, paperwork, and cost.
There is one recent change that made using that leverage much easier, and most homeowners have not heard about it. Since November 21, 2024, OSFI no longer prescribes the minimum qualifying rate for uninsured borrowers doing a straight switch to a new lender at renewal, meaning the same mortgage amount and the same remaining amortization. Insured borrowers had already been exempt earlier that year. Individual lenders still set their own underwriting policy, so it is not a blanket free pass, but the regulatory hurdle that used to keep people stuck with their own bank is gone.
Here are the three things you can actually do when the letter arrives.
| Renew with your bank | Switch lenders | Refinance at renewal | |
|---|---|---|---|
| Prepayment penalty | None | None | None |
| Paperwork | Sign and return | A full application at the new lender | A full application |
| Can the amount change | No | No, a straight switch keeps it the same | Yes, that is the point of it |
| Stress test | Not applied | Not prescribed by OSFI on a straight switch, though the lender sets its own policy | Applies |
| Typical cost | Nothing | Nothing to a few hundred dollars, often covered by the new lender | Legal and appraisal, sometimes covered |
| Best when | Their offer already beats the market | Their offer is above market and nothing else needs to change | You want to consolidate debt or pull equity |
I’m working with a client right now who signed their bank’s renewal offer without running it past me first. The rate was well above what the market would have given them, and now we’re working on breaking that mortgage to get them into something more reasonable, which means dealing with the penalty they didn’t need to pay. A ten-minute conversation before signing would have avoided all of it.
Sometimes your bank really does have the best offer
Here’s the part of my job I think matters most: telling you when you should stay put.
One of the things I’m good at is recognizing when your bank has handed you the best offer available, one of those phenomenal retention rates from the first category. When that happens, I’ll tell you plainly: take it. It’s not worth my time to gather documents and shop the whole market trying to beat an offer that’s already the best one on the table, and it’s certainly not worth yours.
That transparency is the whole point of getting a second opinion. You’re not committing to switching lenders by asking; you’re finding out which kind of letter you received. If it’s the great one, you sign it with confidence instead of doubt. If it’s the other kind, you’ve just saved yourself years of overpaying.
What “best” means beyond the rate
While we’re comparing, it’s worth looking past the number itself. A renewal is also the natural moment to reconsider the shape of your mortgage: fixed versus variable, the term length that matches your plans, prepayment privileges, and portability if you might sell during the term. It’s also the one penalty-free window to restructure: some homeowners use renewal to refinance, consolidate higher-interest debt, or pull equity for a renovation, all without breaking a term to do it. One warning if you bought your first home between 2019 and 2024: check what a refinance does to the First-Time Home Buyer Incentive before you plan around that equity, because repayment can come off the top.
The cheapest rate attached to a rigid mortgage isn’t always the best deal. A comparison should weigh the whole package against what you actually plan to do over the next few years.
Before you sign anything
Treat the renewal letter as an opening position, not a deadline. Federally regulated lenders have to send you a renewal statement at least 21 days before your term ends, and that deadline is the reason so many people feel rushed. Three weeks is enough time to sign something. It is not enough time to shop it properly.
Here is what a review involves, so it is not a mystery. Send me the renewal letter and your current balance and term end date. It takes me a few minutes, it is free, and there is no credit check just to find out where the offer sits against the market. You get a straight answer and no follow-up campaign if you decide to stay.
And whichever kind of letter lands in your mailbox, don’t sign it in the dark. If your mortgage is coming up for renewal in Calgary or anywhere in Alberta, send it my way before you sign. The review is free, it takes minutes, and I’ll give you a straight answer, including “your bank nailed it, go sign” when that’s the truth.
Related questions
What happens if I do nothing and let my mortgage renew automatically?
You will still have a mortgage, but you will probably be paying more than you need to. Federally regulated lenders have to send you a renewal statement at least 21 days before your term ends, and if you never respond, many will roll you into a term at or near their posted rate, which is the highest number they publish. Some lenders instead convert the mortgage to an open or variable arrangement at a higher cost. Nobody is doing anything improper here, it is simply the default, and the default has never once been the best rate available to a borrower who asked.
What does it actually cost to switch lenders at renewal?
Usually somewhere between nothing and a few hundred dollars, and often nothing at all. The costs that can appear are a discharge fee from your current lender, a legal or registration fee at the new one, and sometimes an appraisal. Many lenders cover most or all of that to win your business, and part of my job is asking them to before you commit. What you do not pay is a prepayment penalty, because your term has ended and you owe your current lender nothing.
What is a collateral charge and does it make switching harder?
A collateral charge is a way of registering your mortgage on title, often for more than you actually borrowed, so the lender can lend you more later without new paperwork. The trade-off shows up at renewal, because a collateral charge generally cannot be assigned to a new lender the way a standard charge can. Switching means discharging the old registration and registering a new one, which adds legal cost and a little time. It does not make switching impossible, and lenders will frequently cover the cost, but it is worth knowing which kind you have before you assume switching is free.
Can I change my amortization or my payment at renewal?
Shortening your amortization at renewal is usually simple and free, and it is one of the quietest ways to save a large amount of interest, since every extra dollar goes at the principal. Extending your amortization is a different matter, because it is treated as a change to the loan rather than a straight renewal, so it is not always available and it can take an insured mortgage outside what the insurer allows. Changing payment frequency, or moving to an accelerated payment schedule, is normally easy at renewal with any lender. Ask about all three at the same time you ask about the rate, because renewal is the cheapest moment to change any of them.