Mortgage Renewal Ontario: How to Get a Better Rate (And What Your Bank Won't Tell You)
When your mortgage comes up for renewal, your current lender sends you a renewal letter and hopes you'll sign it without shopping around. Most Canadians do exactly that — and it costs them thousands.
Your renewal offer is the lender's starting position, not their best rate. Here's what you need to know to get a better deal.
How Mortgage Renewal Works in Ontario
At the end of each mortgage term (typically 1–5 years), your outstanding balance comes up for renewal. You're not getting a new mortgage — you're renegotiating the rate and term on the balance remaining. The amortization continues from where it left off.
Ontario homeowners don't need to re-qualify to renew with the same lender (no stress test required at renewal with your existing lender under current OSFI rules). But if you switch lenders, you'll need to re-qualify at the stress test rate.
💡 The 120-Day Window: Most lenders allow you to lock in a renewal rate up to 120 days before your maturity date. Start comparing rates at least 4 months out — you'll have time to negotiate and won't feel rushed into signing.
Why Your Renewal Letter Is Not Your Best Offer
Lenders know that mortgage renewal clients are unlikely to shop around. Switching feels complicated. The paperwork seems daunting. So the renewal rate they offer you is typically 0.25% to 0.75% higher than the best rate they'd offer a new customer walking in the door.
On a $500,000 mortgage over 5 years, 0.50% in extra interest costs you roughly $12,000–$15,000.
⚠️ Your bank's renewal offer is a posted rate, not a discounted rate. Always negotiate or use a broker to shop the market before signing.
Fixed vs. Variable at Renewal: What to Consider in 2025
| Rate Type | Best When | Risk | Current Consideration |
|---|---|---|---|
| Fixed Rate | You need payment certainty, tight cash flow | Higher break penalty (IRD) | Rates have eased — locking in now reasonable |
| Variable Rate | Rates expected to fall, flexible plans | Payment fluctuates with prime | Could benefit if BoC continues cutting |
| Short Term Fixed (1–2 yr) | Expecting rate drops within 2 years | Renewal risk again soon | Popular strategy in current environment |
Should You Switch Lenders at Renewal?
Renewal is the one time you can switch lenders with zero penalty. The only costs are potentially an appraisal and legal fees — but many lenders cover these to win your business.
The math is simple: if a competing lender offers you 0.30% less on a $500,000 mortgage, that's $1,500/year in interest savings. A $1,000 switch cost pays for itself in 8 months.
What You Need to Switch at Renewal
- Proof of income (T4s or NOA — 2 most recent years)
- Property tax statement
- Current mortgage statement showing balance and maturity date
- Photo ID
- Re-qualify at stress test rate (contract + 2% or 5.25%, whichever is higher)
Renewal Mistakes That Cost Ontario Homeowners Thousands
- Signing the first offer — never sign without comparing at least 3 lenders
- Renewing too early (more than 120 days out) — prepayment penalties can apply
- Ignoring amortization — renewal is a chance to reset your amortization if you need lower payments
- Not considering debt consolidation — if you carry high-interest debt, renewal is the time to roll it in at a mortgage rate
- Choosing term based on rate alone — a lower rate in a 5-year fixed locks you in to high penalties if you sell or refinance mid-term
- Missing the renewal date — if you miss your maturity date without a signed renewal, most lenders move you to open mortgage rates (significantly higher)
Your Renewal Is Coming Up?
Paul shops 50+ lenders to find you the best rate before you sign anything. Free comparison, no obligation — takes 15 minutes.
See Renewal Options →How a Mortgage Broker Helps at Renewal
A broker has access to rates from 50+ lenders simultaneously — banks, credit unions, monoline lenders, and trust companies. Many of these lenders don't deal directly with the public. The best rates available in Canada are often from monolines you've never heard of.
More importantly, a broker negotiates on your behalf. When lenders know they're competing for your business, rates drop. I've had clients receive three different rate adjustments from the same lender simply because they were being compared to competitors.
Frequently Asked Questions
How far in advance should I start shopping my mortgage renewal?
Start at least 120 days (4 months) before your renewal date. Most lenders allow you to lock in a rate 120 days early, and many will honour a lower rate if rates drop before closing.
Can I switch lenders at renewal without breaking my mortgage?
Yes. Renewal is the one time you can switch lenders with no penalty. The only cost is a potential appraisal fee ($300–$500) and legal fee (~$900–$1,200) if switching to a new lender, though many lenders cover these costs to win your business.
What is the difference between a renewal and a refinance?
A renewal simply resets your mortgage term at a new rate without changing the amount. A refinance changes the mortgage amount — you can increase the mortgage to access equity, change the amortization, or consolidate debt. Refinancing usually carries a penalty if done mid-term.
