Can I switch lenders at renewal?

Yes. Because your term has ended, moving to a new lender at renewal does not usually trigger a prepayment penalty. The new lender may require you to re-qualify, including the stress test.

Do I have to re-qualify to renew?

Renewing with your current lender generally does not require re-qualifying. Switching to a new lender does, since it is treated as a new mortgage application.

How is renewal different from refinancing?

Renewal continues your existing mortgage at the end of its term with roughly the same balance. Refinancing changes the loan, often the amount, can happen any time, and usually involves a penalty if mid-term.

Mortgage Glossary

What is Renewal?

A mortgage renewal is the point at which your current mortgage term ends and you sign a new agreement for the remaining balance. Because Canadian mortgages are amortized over many years but locked at a rate for shorter terms, you renew several times until the loan is paid off. At renewal you can change rate, term, lender, and payment.

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Quick answer

Also known as: mortgage renewal

Key points

Occurs when your mortgage term ends but a balance remains.
You renew multiple times over a long amortization until the loan is repaid.
Rate, term, payment, and lender can all change at renewal.
Switching lenders at renewal usually avoids a prepayment penalty.
The lender's first renewal offer is often not its lowest rate.

Renewal explained

A renewal happens when your mortgage term reaches its maturity date but a balance remains. Since a typical 25-year amortization is broken into shorter terms, often five years, you must renew the mortgage each time a term ends to continue paying it down. At renewal you agree on a new rate and term for the outstanding balance, either with your current lender or by switching to another.

Renewing with your existing lender is usually simple, sometimes requiring nothing more than signing the offer. But the first rate a lender offers at renewal is often not its best. Shopping around, or switching lenders, can secure a lower rate, and switching does not normally trigger a prepayment penalty because you are at the end of the term, though a new lender may require you to re-qualify.

What a Renewal is for

Renewal exists because Canadian mortgages separate the long amortization from the shorter rate term. It gives both borrower and lender a regular point to reset the rate to current market conditions and to adjust the term. For borrowers, it is a built-in opportunity to renegotiate, change products, or move to a better lender without breakage penalties.

How it can help you

Treating renewal as a chance to shop rather than a formality can save you thousands, since the auto-renewal rate is rarely the lowest available. Comparing offers before you sign gives you leverage to negotiate or switch. Because moving lenders at renewal usually avoids a penalty, the savings can be captured cleanly; Lenderoo lets you compare renewal offers across 40+ lenders for free so you do not simply accept your current lender's first quote.

When it comes up

A homeowner approaching the end of a five-year term receives a renewal letter offering the lender's posted rate. Instead of signing, they compare other lenders, find a rate 0.4% lower, and use it to negotiate. The original lender matches it, saving them hundreds of dollars a year with no penalty for the move.

Example: why shopping at renewal pays

Your five-year term ends with $260,000 still owing. Your lender's renewal letter offers 5.5%. You shop around and find another lender at 5.1%.

That 0.4% difference on $260,000 is roughly $1,000 in interest over the first year alone, and more across a new five-year term. Because you are renewing at the end of your term, switching lenders does not trigger a prepayment penalty, so capturing the lower rate costs little beyond some paperwork and possibly re-qualifying.