Why Mortgage Renewal Is More Important Than Your Original Purchase
When you bought your home, you likely spent weeks comparing rates and negotiating. But most Canadian homeowners spend less than 15 minutes on their renewal — they open the letter from their bank, sign, and return it.
That's a mistake. Your renewal is a full open market event. Your current lender has no automatic right to keep your business, and the rate they show you first is almost never their best. By not shopping, you're leaving money on the table — often thousands of dollars over a 5-year term.
"On a $500,000 balance, a 0.40% rate difference is worth roughly $10,000 over a 5-year term. That's not a rounding error."
— Paul Hunjan, Mortgage Broker
The Ontario Mortgage Renewal Timeline
Here's exactly how to approach your renewal, and when:
-
1120 Days Before Maturity — Start ShoppingContact a broker. Most lenders allow a 120-day rate hold — you lock in a rate now with no obligation, giving you downside protection if rates rise before your maturity date.Rate Hold Window
-
290 Days — Review Your Financial PositionHas your credit changed? Income changed? Have you taken on more debt? This determines which lender tier you qualify for and whether switching makes sense.Assessment
-
360 Days — Compare Offers, Choose TermFixed vs. variable. 1-year vs. 5-year. Open vs. closed. Paul models each scenario for your specific balance, income outlook, and risk tolerance.Decision Point
-
430 Days — Submit Application (if Switching)If moving to a new lender, the new lender needs to process the switch. Legal work, title insurance, and title transfer take time. Leave 30+ days minimum.Application Window
-
5Maturity Date — Renewal EffectiveNew term begins. If staying with the same lender, no legal work required. If switching, the new lender pays out your current lender and your new terms begin.Done
Renewal Rate Comparison Calculator
Estimate potential savings by shopping your renewal. OAC. For illustration purposes only.
Results are estimates. Actual rates subject to lender approval, qualification, and OAC. Monthly payment based on specified balance, amortization, and fixed rate with monthly compounding. Not a commitment to lend.
Renewal Options by Lender Type
Which lender tier is right for your renewal depends on your credit, income, and equity position:
| Factor | A-Lender (Bank) | B-Lender (Alt) | Private Lender |
|---|---|---|---|
| Credit Score Required | 680+ | 550–680 | Any |
| Best Rate Available? | ✓ | Close | Higher |
| Self-Employed Friendly | Limited | ✓ | ✓ |
| Missed Payments OK | ✗ | Some | ✓ |
| Stress Test Required | Yes | Some | ✗ No |
| Typical Term Options | 1–5 yr | 1–2 yr | 1–2 yr |
| Lender Fees | None | 0.5–1% | 1–2%+ |
Renewing When Your Situation Has Changed
Life doesn't stay the same between terms. Here's how common changes affect your renewal options:
Credit Has Declined
Your existing lender may or may not renew. If they do, it'll be at a higher rate. A broker can find B-lenders or private options while building a plan to restore your A-lender qualification next term.
Became Self-Employed
Your T4 income is gone. Banks will stress-test stated income. Alt-lenders using bank statement or stated income programs are often the right fit for the renewal term until income is documentable.
Added Consumer Debt
Higher TDS ratios can push you out of A-lender qualification. At renewal, a broker can help consolidate or restructure to get your ratios back in range — sometimes in the same transaction.
Bankruptcy or Consumer Proposal
If you're within 2 years of discharge, most A-lenders won't touch you. Private and B-lenders can bridge you through the renewal while you rebuild credit toward a clean A-lender renewal next cycle.
Separation or Divorce
The renewal is often the trigger point for a buyout or property sale decision. If one partner is keeping the property, they need to qualify solo. Equity bridging and private solutions are common here.
Property Value Has Declined
Lower property value means lower LTV. Some lenders won't renew above 80% LTV without CMHC insurance. Private lenders can bridge short-term while values stabilize or the mortgage is paid down.
Fixed vs. Variable at Renewal: Paul's Framework
Paul's honest take: There's no universally right answer on fixed vs. variable. It depends on your income stability, how you'd handle a 1–2% rate jump, and what the current rate spread looks like. Anyone who tells you one is always better without knowing your situation is guessing. I model both options for every client at renewal.
Fixed Rate
- Payment certainty for the full term
- Protection if rates rise significantly
- Easier to budget, especially on single income
- Potentially higher if rates drop mid-term
- Typically higher prepayment penalties (IRD)
Variable Rate
- Historically lower over full rate cycles
- Lower penalty (3 months interest only)
- Payment fluctuates with prime rate
- Suitable if you can absorb rate variation
- Consider 1–2 yr fixed as middle ground
Frequently Asked Questions
Start 120 days (4 months) before your maturity date. Most lenders allow you to lock in a rate early without penalty. Waiting until your renewal letter arrives gives you less leverage and fewer options — by then your lender knows you're unlikely to switch.
Yes, almost always. Your bank's posted renewal rate is not their best rate. A mortgage broker can use competing offers from other lenders as leverage to negotiate a better rate — or simply move your mortgage to a lender offering better terms. Many clients save 0.25%–0.75% just by having a broker shop the renewal.
Yes. Your renewal date is the one time you can switch lenders without a prepayment penalty. There may be legal and appraisal costs, but your broker often negotiates these to be covered by the new lender. If your financial situation has changed (lower credit, self-employed, more debt), switching may be harder — start early.
If you don't renew before the maturity date, most lenders convert you to an open mortgage at their posted rate — which can be 1–2% higher than their best fixed rates. You generally have a short grace period. Contact a broker immediately if your renewal date has passed or is approaching without a plan.
Yes, but your options may be more limited than when you first got your mortgage. Your existing lender has no obligation to renew if the risk profile has changed significantly. B-lenders and private lenders offer renewal solutions for borrowers with bruised credit, missed payments, or income changes. The earlier you engage a broker, the more options remain available.
It depends on your risk tolerance, income stability, and rate outlook. Fixed provides certainty; variable historically offers lower rates but with payment fluctuation risk. At renewal, many borrowers opt for a shorter term (1–2 year fixed) to maintain flexibility. Paul models both scenarios for your specific balance and timeline.