Mortgage Renewal: Why the First Offer Isn't the Best (2026)
A lender’s auto-renewal letter is a starting point. On a $376,000 balance, 0.30% off the offered rate saves $60 a month and $3,600 over the term.
The renewal letter your lender sends four to six months before maturity is usually at or near its posted rate, priced for the share of borrowers who sign and return it. The same lender will often shave 0.20% to 0.50% off for anyone who asks, and a competing lender may go further. On a $376,000 balance over 20 years, 0.30% is $60 a month and about $3,600 over a five-year term. Since November 2024 uninsured borrowers can switch lenders at renewal without re-qualifying under the stress test, which removes the main reason people used to stay put.
Figures come from the CostToClose renewal shock calculator.
What a rate difference is worth
Balance $376,000 (a $450,000 mortgage from 2021 after five years), 20 years remaining:
| Renewal rate | Monthly payment | Over a 5-year term vs 4.79% |
|---|---|---|
| 4.79% (typical first offer) | $2,429 | — |
| 4.49% (after a phone call) | $2,369 | −$3,600 |
| 4.19% (competing lender) | $2,310 | −$7,157 |
Computed with the CostToClose calculator, 14 September 2026.
The 2021 renewal shock
Borrowers who took five-year fixed rates in 2021 at 1.5% to 2% are renewing in 2026 at 4.2% to 4.8%. On the mortgage above, the original payment was $1,882; the renewal payment at 4.49% is $2,369, $487 a month more, or 26%. Two things soften it: the balance has fallen, and lenders will extend the amortization back to 25 or 30 years for borrowers who need the payment lower (at a cost in lifetime interest). See the renewal shock calculator for your own figures.
Why you can switch now
Until November 2024, moving an uninsured mortgage to another lender at renewal meant passing the stress test again at the new contract rate plus 2%. OSFI removed that requirement for straight switches (same balance, same amortization), so a borrower whose income or ratios have tightened is no longer trapped with their current lender. Insured mortgages were already exempt. A switch still involves an appraisal and legal or title work, which the new lender often pays.
The timeline
- 120 days out: most lenders will hold a rate for 90 to 120 days. Start shopping.
- Get three quotes: your lender's first offer, your lender's counter after you show a competing quote, and at least one outside lender or broker.
- Ask about the penalty method and prepayment privileges at each, not just the rate.
- 21 days before maturity: federally regulated lenders must send the renewal statement by then. If you have done nothing, most will auto-renew you into a term of their choosing, often at posted rates.
- Maturity date: the switch or new term begins.
Worked example from the calculator
Borrower, 2021 mortgage of $450,000 at 1.89%, five-year fixed, 25-year amortization. Balance at maturity $376,089.
| Metric | Original | Renewal, first offer | Renewal, negotiated | Renewal, negotiated + amortization reset to 25 years |
|---|---|---|---|---|
| Rate | 1.89% | 4.79% | 4.49% | 4.49% |
| Amortization remaining | 25 | 20 | 20 | 25 |
| Payment | $1,882 | $2,429 | $2,369 | $2,079 |
| Change | — | +$547 | +$487 | +$197 |
The amortization reset lowers the payment most but adds five years and tens of thousands of dollars of interest; it is a tool for a bad year, not a default. Reproduce this.
What changes the number
- The lender's penalty method if you might break the new term.
- Term length. Two- and three-year fixed rates are sometimes lower than five-year; shorter terms mean more renewals.
- Variable at renewal is an option; see Fixed vs variable.
- Insured status. Insured mortgages get slightly better rates at switch time because the insurance follows them.
Frequently asked questions
Can I negotiate my mortgage renewal rate?
Yes. The first offer is rarely the lender's best; asking, or showing a competing quote, commonly yields 0.20% to 0.50% off.
Do I have to pass the stress test to switch lenders at renewal?
Not for an uninsured straight switch since November 2024, and not for insured mortgages. Refinancing for more money still requires qualification.
When should I start shopping for a renewal?
About four months before maturity; most lenders hold rates 90 to 120 days.
What happens if I ignore the renewal letter?
Most lenders automatically renew you into a term at their posted rate — usually the most expensive outcome.
Can I extend my amortization at renewal?
Often, back to 25 or 30 years, with the current lender or on a switch. It lowers the payment but increases total interest.
Sources
- Office of the Superintendent of Financial Institutions, mortgage switches at renewal (November 2024) — checked 14 Sept 2026
- Financial Consumer Agency of Canada, renewing your mortgage; 21-day renewal statement requirement — checked 14 Sept 2026
- Bank of Canada, mortgage rate series — checked 14 Sept 2026
This guide is general information for Canadian home buyers and sellers, checked against the sources listed above on the date shown. It is not legal, tax, or mortgage advice. Rules and rates change; confirm current figures with your lawyer or notary, your lender, or the government office that administers the tax before relying on them.