Do not sign the renewal letter until someone has checked it against the market

Renewal is the one moment in the life of your mortgage when the whole balance can move to a different lender without a penalty. That is the entire opportunity, it arrives once every few years, and most people sign it away in the time it takes to open an envelope. Before you sign anything, have someone read your renewal offer against what the rest of the market would do. It is free, it takes a day, and it is the cheapest money you will ever make on your house.

What a renewal actually is, and what it is not

Your mortgage has two clocks running at different speeds. The amortization is how long the debt takes to disappear, usually 25 or 30 years at the start. The term is how long your current contract lasts, usually one to five years. When the term ends, the balance that is left has to be priced again for a new term. That is a renewal.

Nothing about a renewal changes what you owe. You are not paying anything off, borrowing anything more, or restarting the clock. You are agreeing to the interest rate, term and conditions that will apply to the balance you already have, for the next few years.

That is what separates it from a refinance, where the amount owing changes because you are taking equity out or consolidating other debt. The distinction matters more than it used to, because the rules now treat the two very differently. More on that below.

What your lender has to tell you, and when

If your mortgage is with a federally regulated lender, which covers the banks and most of the large lenders, it must send you a renewal statement at least 21 days before your term ends. That statement has to set out the rate, the term and the payment being offered, and if the lender intends to renew you automatically when you do not respond, it has to say so.

Twenty-one days is the legal floor, not a sensible planning horizon. The Financial Consumer Agency of Canada’s own advice is to start looking a few months before your term ends rather than waiting for the letter to arrive. By the time it lands, you have three weeks to make a decision worth thousands of dollars, which is exactly the position the weaker offers are counting on.

Banks go one of two ways at renewal

Here is one of the more remarkable things about how lenders behave when your term ends. They tend to do one of two things, and there is no way to tell which from the letter alone.

Sometimes they send an excellent offer, better than market, better than anything I could find you elsewhere. Renewal is the cheapest possible moment for a lender to keep a client: no commissions, almost no work, and you are already in the building. When they decide to compete for you, they can compete hard.

And sometimes they send a high rate and simply hope you sign it without talking to anybody. That is where the real risk sits. Most people renew without shopping around, and some renewal letters are priced accordingly. Both offers arrive in the same envelope with the same friendly tone, which is why you should never sign renewal paperwork without having someone who knows the market look at it first.

What half a percentage point actually costs

The gap between a competitive renewal and a lazy one is usually a fraction of a percent, which sounds like nothing. Run it through the arithmetic and it stops sounding like nothing.

Take an illustrative file: $400,000 left on the mortgage, 20 years of amortization remaining, a five-year term. Compare two rates half a point apart.

Over a five-year term	Lower rate	Half a point higher
Monthly payment	$2,519.51	$2,626.34
Interest paid over the five years	$81,655	$91,036
Balance still owing at the end of the term	$330,485	$333,455

The gap is about $107 a month, which is the part people notice, and $9,381 over the term once you add the extra interest to the larger balance you are left holding, which is the part they do not. You paid more every month and you have less of the house paid off at the end of it.

Those figures are an example rather than a quote, and the rates available to you depend on your file and the day you are shopping. The shape of the result does not change. Half a point on a mortgage this size is roughly a year of groceries, decided by a signature on an envelope.

The rule that changed in November 2024

This is the most useful thing to know about renewals right now, and most homeowners have not heard it.

Until late 2024, moving your mortgage to a new lender at renewal meant passing the federal stress test all over again: you had to qualify at the greater of 5.25% or your contract rate plus two percentage points. Staying put required none of that. The rule had the perverse effect of locking people in with the lender who already had them, because the only borrower who could not leave was the one whose offer was worst.

On November 21, 2024, OSFI removed the minimum qualifying rate for straight switches. A straight switch means:

• the loan amount does not increase, other than up to about $3,000 in costs related to the transaction;
• the amortization stays the same or gets shorter;
• you are not taking any new money out of the property.

Meet those conditions and the stress test no longer applies to the switch, whether your mortgage is insured or uninsured. Insured mortgages had effectively had this treatment for years; the change brought uninsured borrowers, meaning those who put 20% or more down, into line.

What has not changed is everything else. It is still a new application with a new lender. Your income and credit are still reviewed, the property still has to satisfy the lender, and the lender still runs its own gross and total debt service ratios. And the exemption stops the moment the transaction stops being a straight switch: a refinance, an extended amortization or any new funds are qualified the usual way, at the stress-test rate.

The practical effect is that shopping your renewal is now easier than at any point in the last decade. If your file is roughly what it was when you bought, the door to the rest of the market is open.

Who has to requalify, and who does not

What you are doing	What is required
Renewing with your current lender	No requalification. Sign, or negotiate.
Straight switch to a new lender	New application. Income, credit and property reviewed. No stress test.
Refinancing, or taking equity out	Full qualification at the stress-test rate.
Extending the amortization	Full qualification at the stress-test rate.
Adding a home equity line of credit	Qualification on the new credit, at the stress-test rate.

If your situation has changed since you bought, tell me early. Whether a switch is realistic is a five-minute question at the start, and an expensive discovery at the end.

When your bank has the best offer, I will tell you to take it

One of the things I am best at is recognising when your lender has handed you one of those strong retention offers, and saying so. When the best offer is already on your kitchen table, it is not worth my time going out to collect everything and try to beat it, and it is certainly not worth yours. You go back and sign with confidence, knowing the offer was tested rather than taken on faith.

That is the point of the review. You are not committing to switching by asking. You are finding out which kind of letter you received, and either answer leaves you better off than guessing.

Renewal is also your penalty-free window to restructure

Because your term is ending, this is the one moment you can reshape the mortgage without paying to break anything. There are four routes, and we look at all of them:

Renew as is. Same balance, same structure, new rate and term. The right answer more often than people expect.

Refinance. Increase the balance to access equity, usually for a renovation or to clear other debt. Available up to 80% of the property’s value, and qualified at the stress-test rate because it is new money.

Renew as is and add a HELOC alongside it. This is the option most people have never been offered. Your mortgage stays exactly the same, same balance and same structure, and a home equity line of credit sits beside it for flexible access to your equity. It has been powerful for a lot of my clients, because nothing about the existing mortgage gets re-priced or enlarged. There is a full explanation on the HELOC page.

Consolidate debt into the mortgage. Clearing credit cards and loans at renewal skips the prepayment penalty you would pay to do the identical thing mid-term, so the same restructure costs thousands less purely because of when you do it.

If the goal is to reach equity without disturbing the first mortgage at all, a second mortgage is a fifth option, and occasionally it is the right one.

The decisions at renewal that are not the rate

Rate is the number everybody compares. It is not the only thing you are signing.

Term length. A five-year fixed is the default, not the automatic answer. A shorter term costs a little more per month in most rate environments but frees you sooner; a variable rate moves with prime and usually carries a much cheaper exit. The right term depends on what you expect to do with the house, not on a forecast.

Prepayment privileges. Most mortgages allow a lump sum of a set percentage of the original balance each year and let you raise your regular payment by a set amount, both without penalty. The percentages vary a good deal between lenders. If you expect bonuses, a rotational schedule with occasional lump sums, or an inheritance, this clause is worth more to you than a small rate difference.

How the penalty is calculated, if you ever break early. On a variable rate the penalty is usually three months’ interest. On a fixed rate it is the greater of three months’ interest or the interest rate differential, and lenders calculate that differential very differently. Some use posted rates, which can produce a penalty many times larger than the same balance would attract at a lender that uses its own discounted rates. Plenty of people who intend to hold a five-year term end up moving, separating or refinancing inside it.

Standard charge or collateral charge. Some lenders register the mortgage as a collateral charge, which makes it easy to add a HELOC or borrow more later without a new registration, but can mean legal work and cost to move it to another lender at the next renewal. Neither type is wrong. Find out which one you are signing, because it shapes what your next renewal looks like.

What can go wrong at renewal, and how to see it coming

Most renewals are uneventful. The ones that are not usually involve something that changed since you bought, and every one of them is easier to handle with four months in hand than with three weeks.

• Your income changed shape. Going from salaried to self-employed or contract work does not stop you renewing where you are, but it changes which other lenders will take the file, and what paperwork they want.
• Credit took a hit. A missed payment history, a collection, or a consumer proposal narrows the field. It rarely closes it, and there are lenders that specialise in exactly this.
• The property changed. A conversion, a secondary suite, or a value that has moved against you can affect the switch even where the payment history is spotless.
• You are carrying more unsecured debt than last time. This is the common one. It usually points at a consolidation rather than a plain renewal, and consolidations are qualified as new money.

None of these are reasons to give up and sign the letter. They are reasons to start early, because the fallback, staying with your current lender, is still available right up until your term ends. You lose nothing by checking, and you lose the option entirely by waiting.

The renewal timeline that works

Four months out. Get the review started. Most lenders will hold a rate for 120 days, and many will give you the lower rate if rates fall before closing, so an early start costs nothing and only adds options.

Three months out. Decide between renewing, switching, or restructuring, and get the application in if you are moving. This is where a document list gets assembled without pressure.

Twenty-one days out. Your lender’s renewal statement must be in your hands by now. If you have already done the work, this is a piece of paper you check rather than a decision you make.

Maturity day. The new mortgage funds and the old one is paid out, with no gap and no missed payment. Done properly, nothing about this day is dramatic.

Leaving it to the final week is how people end up signing out of time pressure, which is exactly what a poorly priced letter is counting on.

The renewal plan is made at the start, not at the end

Most of what I do is not getting a mortgage. It is looking after one across its whole life, and that starts with a question I ask on the day we fund rather than five years later: what do you want to be true when this term ends?

It sounds abstract and it is completely concrete. The answers I hear are things like: I want a decent chunk of the balance gone, I want to be able to sell without a penalty, I want enough equity to put a suite in the back, I want the credit cards at zero, I want to be able to switch lenders without having to prove income because I am going out on my own.

Every one of those answers points at a different decision today. Shorter term or longer, fixed or variable, accelerated biweekly or monthly, prepayment privileges used or left on the table. Those choices cost little or nothing at the start and they decide where you end up. Made in the dark, they simply happen to you.

When we talk again: 7 days, 45 days, 6 months, 11 months, then annually

This is the question almost no client thinks to ask, so I answer it before you have to.

When	What it is for
7 days	Just a check in. Making sure everything is going well, that you are comfortable in the new home, and congratulations
45 days	Did the first payment come out right? Are property taxes and insurance sorted? And whatever else has come up
6 months	Another check in. How it is going, whether you need to talk to me about anything, and whether you want to book time to chat properly
11 months, then annually	The annual review, done deliberately at 11 months rather than 12

Four contacts in the first year and one a year after that.

The 11-month call is the one with a technical reason behind it, and it is worth explaining. The way a break penalty is calculated can change when you cross into a new year of the term: depending on the method, the penalty can get either bigger or smaller. Doing the review at 11 months leaves time to run strategy on that and decide whether it is worth changing, breaking or moving the mortgage before the number turns over. At 12 months that window has already closed.

The rest of the first year is simpler. It is where everything is new and where the questions nobody expects turn up: the first payment leaving the account, the first property tax bill arriving, the first home insurance renewal.

After that first year the mortgage settles and the conversation changes job. It becomes a review: what has changed in your life, what has changed in the market, and whether either of those has opened something worth acting on before maturity. A rate that has fallen far enough to be worth it even after a penalty. Equity that has grown enough to solve something else. Income that moved, up or down. A child arriving, a child leaving, a separation, a retirement.

And four months before maturity it gets concrete again, because that is when the rate-hold window opens and your renewal stops being a future topic.

Why I am insistent about this

Because most of the people who arrive with a problem at renewal are coming from a lender, or from another broker, who only spoke to them when there was a mortgage to be written. Five years of silence, then a letter with a signature line.

If rates move and an early renewal would leave you ahead, I look for that and bring it to you rather than expecting you to catch it. Whether it makes sense depends on how much term is left and what breaking it would cost, so it is a calculation rather than an automatic yes. But somebody should be running it, and if nobody is, that is the actual problem.

Your maturity date should find you prepared rather than starting from scratch.

If switching is the right call, it is simpler than you expect

When the comparison shows another lender leaves you ahead, my team handles the paperwork end to end. Because you are moving at the natural end of your term there is normally no penalty, and the incoming lender often covers the basic costs of the switch, such as the appraisal and the legal work.

Alberta helps here too. There is no provincial land transfer tax, so the registration cost of moving a mortgage between lenders is small compared with what the same move costs in most other provinces. You sign a few documents, we coordinate the rest, and the new mortgage is in place before the old one matures.

Review your renewal

Got a renewal letter in hand, or a maturity date in the next few months? Do not sign yet. My team and I will tell you which kind of offer you are holding, what your options are, including a refinance or a HELOC if they fit, and exactly where you come out ahead, even when the answer is to stay right where you are.

The review is free, carries no obligation, and there is no credit check just to have the conversation.

Sources: the 21-day renewal statement requirement and the advice to start early come from the Financial Consumer Agency of Canada’s guidance on renewing your mortgage. The removal of the minimum qualifying rate for straight switches, effective November 21, 2024, is OSFI’s, and its conditions are set out in the industry coverage of the change. Payment and interest figures in the worked example are calculated with Canadian semi-annual compounding and are illustrative.