Mortgage Renewal in Canada: How to Get the Best Deal

When your mortgage term ends, you don't pay off the whole loan — you renew the remaining balance for a new term. It sounds routine, and that's exactly the trap: the easiest path is to sign your lender's renewal letter without a second thought, often at a rate that isn't their best. Renewal is one of the rare moments you hold real negotiating power. Here's how to use it.

Key takeaways

• At the end of your term you renew the remaining balance for a new term — the amortization simply continues.
• Lenders often send a renewal offer that isn't their lowest rate; always negotiate or shop around.
• Switching lenders at renewal can trigger a fresh stress test (greater of contract rate + 2% or 5.25%); staying put usually doesn't.
• Renewal is the ideal time to change your rate type, payment frequency, or amortization.
• HOMEH offers free mortgage tools and the industry's highest Cashback Rebate to eligible buyers. Sellers list for 1%, or free when they also buy with HOMEH within 6 months, or $395 + HST with a Mere Posting.

What a mortgage renewal is

Most Canadian mortgages have a term of 1 to 5 years but an amortization of 25 years or more. When the term ends, you still owe a balance — so you renew it for a new term at a new rate. Your amortization clock keeps ticking; only the contract resets. For the bigger picture, see how mortgage amortization works.

Your lender will typically send a renewal offer a few months before your term expires. It's convenient to just sign and return it — but that convenience can be expensive.

Why you should never auto-renew

The rate on an automatic renewal letter is often not the lender's most competitive offer. Lenders know many borrowers will sign without comparing. Even a small rate difference adds up to thousands of dollars over a multi-year term, so renewal is worth your attention every single time.

Consider a $400,000 balance: a rate just 0.25% higher than necessary can cost roughly $1,000 a year in extra interest — and over a five-year term, that's thousands you could have kept. The renewal letter is designed for convenience, not for your savings, so the few hours it takes to compare offers is some of the best-paid work you'll do all year.

Start early

Begin shopping and negotiating 3 to 4 months before your term ends. That gives you time to compare offers, gather documents, and switch lenders if needed — without the pressure of a looming deadline.

Stay or switch?

At renewal you can stay with your current lender or move to a new one. Each path has trade-offs, and the stress test is a key factor:

Because switching lenders can mean re-qualifying at the greater of your contract rate plus 2% or 5.25%, borrowers whose finances have tightened sometimes have more flexibility staying put. Understand the test in what is the mortgage stress test.

That said, don't let the convenience of staying lull you into accepting a poor rate. The smartest approach is to gather competing quotes first, then use them as leverage with your current lender. Often you can secure a better rate without the paperwork of switching — but only if you've done the homework to know what "better" actually looks like in the current market.

Make changes while you can

Renewal is a penalty-free moment to reshape your mortgage. Because the term is ending anyway, you can adjust without breakage costs:

• Switch rate type — move between fixed and variable; see fixed vs variable mortgage rate.
• Change payment frequency — accelerated bi-weekly payments can shorten your amortization.
• Adjust amortization — shorten it to pay off faster, within your lender's limits.
• Add prepayment privileges — to pay down lump sums penalty-free.

How to get the best renewal deal

Treat renewal like a fresh mortgage hunt. Compare current rates, ask your lender to beat the best offer you've found, and don't be afraid to switch if the savings justify any costs. Run the numbers with the HOMEH mortgage calculator, and if your goals have changed, weigh whether to renew or restructure in should I refinance my mortgage and how mortgages work in Canada.

The industry's highest Cashback Rebate with HOMEH

HOMEH gives eligible buyers the industry's highest Cashback Rebate — and free tools to make every mortgage decision smarter. Sellers list for 1%, or free when they also buy with HOMEH within 6 months, or $395 + HST with a Mere Posting. Run your renewal scenarios with the mortgage calculator.