Overview
Many Canadian homeowners face the decision to renew their mortgage with their current lender or switch to a new lender at the end of their mortgage term. The right choice depends on your financial goals, current market rates, and the terms available from both your existing and potential new lenders. With interest rates having changed significantly in recent years, this renewal cycle is especially critical for maximizing savings and managing future payments.
Mortgage Renewal vs. Switching: Key Considerations
Renewing with Your Current Lender
- Simplicity: The renewal process with your current lender is straightforward—usually just signing a new contract. You typically do not need to requalify if you stay with the same product, and there are generally no fees from A-lenders.
- Inertia Costs: Many lenders rely on customers auto-renewing without shopping around, often resulting in less competitive rates.
- Negotiation Opportunity: Use offers from other lenders as leverage to negotiate a better rate with your current lender.
Switching to a New Lender
- Better Rates and Terms: New lenders may offer lower rates, cash incentives, or more suitable terms (e.g., fixed vs. variable).
- New Application Required: You must requalify with the new lender, but note that the mortgage stress test is generally not required for switches at renewal.
- Potential Fees: Costs may include appraisal, discharge, and registration fees, though some lenders will cover these to earn your business.
- Possible Cash Bonuses: Some lenders and brokers offer cash bonuses for switching—sometimes up to $4,000.
Comparing Your Options
| Feature | Renew with Current Lender | Switch to New Lender |
|---|
| Ease of Process | Very easy | More involved |
| Need to Requalify | Usually not | Yes (but no stress test at renewal) |
| Fees | Typically none | Possible, but often covered by new lender |
| Negotiation Leverage | Moderate | High (due to competition) |
| Potential Savings | Lower unless you negotiate | Higher, especially if rates are lower elsewhere |
| Access to New Products | Limited | Broader |
Current Market Conditions
- Rising Renewal Payments: Most fixed-rate mortgages up for renewal in 2025 will face higher payments—average increases of 10% for all renewals and up to 15–20% for five-year fixed products.
- Variable-Rate Mortgages: Some variable-rate holders may see slightly lower payments, depending on timing and product type.
- Rate Shopping is Essential: With rates fluctuating and lenders competing for business, shopping around can save thousands over your next term.
Government Guidance and Incentives
- Federal Oversight: Your lender must ensure products are appropriate for your financial situation. Always review your needs and ask questions at renewal.
- First-Time Homebuyer Programs: While these are generally for new purchases, some provincial programs offer incentives or tax credits if you are moving or porting your mortgage as a first-time buyer.
Provincial Variations
- Fees and Registration: Switching fees and administrative costs can vary by province due to differences in land title systems and discharge processes.
- Local Programs: Some provinces offer unique incentives or rebates for switching mortgages, especially for first-time buyers.
Major Canadian Bank Offerings
- All major banks offer both renewals and switches but may reserve their best rates for new clients or those who negotiate.
- Consider using a broker or a comprehensive platform like theratefinder to access a broader range of rates and lender options.
Common Mistakes to Avoid
- Auto-renewing without negotiation: This often results in a higher rate than necessary.
- Not shopping around: Failing to compare rates could mean missing out on significant savings.
- Ignoring fees: While many lenders will cover switching fees, always clarify upfront to avoid surprises.
- Extending amortization blindly: Lowering payments by extending amortization increases total interest costs.
Actionable Next Steps
- Start Shopping Early: Begin comparing rates and terms 3–6 months before your current term expires.
- Negotiate: Use competing offers to push your current lender for a better deal.
- Calculate the Costs: Weigh any potential switching fees against the long-term savings of a lower rate.
- Consult an Expert: Consider working with a mortgage broker or using a rate comparison service for the best options.
- Personalized Application: For a streamlined, multi-step process and access to top lender rates, start your application at theratefinder.ca/onboarding for a tailored mortgage solution.
Summary
- Renewing is easier but may not yield the best rate unless you negotiate aggressively.
- Switching could save thousands, especially in today’s rising rate environment, but requires requalification and attention to fees.
- Shop around and compare offers from banks, brokers, and online platforms like theratefinder to maximize your savings and ensure the best fit for your financial goals.
- Act early—don’t wait for your renewal letter.
If you’re ready to explore your options and get personalized advice, begin your application with theratefinder to access competitive rates and tailored mortgage solutions.