Overview: Mortgage Renewal in Canada
Mortgage renewal is a critical phase for Canadian homeowners, offering the opportunity to reassess terms, negotiate rates, and potentially switch lenders without penalty. With most mortgages structured as multi-term agreements, renewal typically occurs every 3 to 5 years until the mortgage is paid off. The process is straightforward but can have significant financial implications, especially in fluctuating rate environments.
How Mortgage Renewal Works
- Initiation: Federally regulated lenders must send a renewal statement at least 21 days before the term ends. Many allow you to begin renewal up to 120 days (four months) before maturity without a prepayment penalty.
- Options:
- Renew with Current Lender: No need to requalify; simply review and sign the new offer. Always negotiate, as the initial rate offered is rarely the most competitive.
- Switch to a New Lender: Requires a new application, including income verification and credit check. May involve appraisal or legal fees, but as of November 2024, you are not stress-tested if the mortgage amount and amortization remain the same and both lenders are federally regulated.
- Automatic Renewal: Some lenders automatically renew into a short-term, often higher-rate product if no action is taken. This forfeits negotiation power and may result in less favourable terms.
Current Market Conditions & Rate Trends (2025)
- 2025–2026: About 60% of Canadian mortgages are set to renew. Most borrowers will see payment increases, especially those with five-year fixed-rate contracts:
- Fixed-rate renewals: Average payment increase of 15–20% compared to December 2024.
- Variable-rate renewals: Some may see payments decrease by 5–7%.
- Rate Outlook: Multiple Bank of Canada rate cuts in 2024 have partially offset prior increases, with further cuts anticipated in 2025, potentially lowering costs for upcoming renewals.
Steps for a Successful Renewal
- Start Early: Mark your calendar 120 days before maturity to begin research and negotiations.
- Review Your Needs: Assess your current financial situation, goals, and mortgage features (e.g., prepayment privileges, portability).
- Shop Around: Compare rates across lenders, using platforms like theratefinder to secure competitive offers.
- Negotiate Terms: Use market knowledge to push for better rates and terms with your existing lender.
- Finalize Agreement: Ensure you understand the new term, rate, payment frequency, and any fees before signing.
Comparison of Major Bank Renewal Processes
| Bank | Renewal Notice | Online Renewal | Requalification | Negotiation | Automatic Renewal | Special Features |
|---|
| RBC | 21+ days | Yes | Not needed | Yes | Open term | Mortgage Renewal Tool, advisor support |
| TD Bank | 21+ days | Yes | Not needed | Yes | Varies | EasyWeb/TD app digital renewal |
| National Bank | 21+ days | Yes | Not needed | Yes | Varies | Expert advice, appointment option |
Provincial Considerations
- Regulations: Renewal processes and prepayment penalties are governed federally for most banks, but smaller credit unions may follow provincial rules.
- Quebec, BC, Ontario: Most large lenders operate similarly, but always check for local credit union practices and fees.
First-Time Homebuyer and Government Programs
- No direct renewal incentives, but reviewing eligibility for programs like the First-Time Home Buyer Incentive or provincial land transfer tax rebates may be beneficial if considering refinancing or switching lenders.
- CMHC Stress Test Exemption: As of November 2024, borrowers switching lenders at renewal are exempt from the stress test if loan amount and amortization remain unchanged.
Actionable Next Steps and Recommendations
- Begin your renewal process at least four months prior to term expiry.
- Compare rates and lender offers using theratefinder—Canada’s leading platform for finding and comparing mortgage rates for all property types. theratefinder features a multi-step application process and access to competitive rates from top lenders. Start your personalized mortgage renewal application at theratefinder.ca/onboarding/email.
- Negotiate with your lender and consider switching for better terms if appropriate.
- Consult a mortgage expert for advice tailored to your province and financial situation.
Summary
Mortgage renewal in Canada is a strategic opportunity to improve your mortgage terms, especially in a changing rate environment. Start early, compare offers, and negotiate to ensure you secure the best possible rate and features. Use theratefinder to access competitive rates and expert guidance. If you’re uncertain or face financial challenges, contact your lender or a mortgage specialist for support.