Mortgage Renewal in Ontario

Why You Should Never Auto-Renew

When your mortgage term ends, your lender sends a renewal offer — typically 120 days before maturity. Most Canadians simply sign it and send it back. That is a costly mistake.

Renewal offers are almost always at or near the lender’s posted rate, which is significantly higher than negotiated rates available through a broker. On a $400,000 mortgage, the difference between a posted 5.29% and a negotiated 4.04% rate saves you over $24,000 in interest over a five-year term. Signing without shopping is the most expensive signature you will ever write.

The 2025-2026 Renewal Wave

Roughly 60% of Canadian mortgages — approximately 1.2 million loans — are renewing in 2025 and 2026. Many of these borrowers locked in at historically low rates between 2020 and 2022 and are now facing significantly higher renewal rates.

The Bank of Canada overnight rate currently sits at 2.25%, but five-year fixed rates remain in the 4% to 5% range due to elevated bond yields. Homeowners in Hamilton, Burlington, Brantford, and across Southern Ontario who locked in at 1.5% to 2.5% are seeing monthly payment increases of 15% to 20% — roughly $400 to $500 more per month.

This is exactly why renewal shopping matters more now than at any point in the last decade.

Stress Test Exemption for Renewals

As of November 21, 2024, OSFI removed the mortgage stress test requirement for straight switches at renewal — for both insured and uninsured mortgages. This means you can switch to a new lender at renewal without having to qualify at the stress test rate, as long as you are not increasing your loan amount or extending your amortization.

This is a game-changer. Previously, many borrowers were trapped with their current lender because they could not pass the stress test at a new lender. Now you have full freedom to shop the market at renewal.

When to Start Shopping Your Renewal

Most lenders allow you to begin the renewal process 90 to 180 days before your term expires — with no penalty. I recommend starting at least 120 days out. Here is why:

• Rate holds: A broker can secure a rate hold for 90-120 days, protecting you if rates rise before your renewal date.
• Time to compare: Shopping multiple lenders takes time. Starting early gives you leverage to negotiate.
• No penalty: Shopping early and switching at maturity costs you nothing.

Switching Lenders vs. Staying

At renewal, you have three options: renew with your current lender at a negotiated rate, switch to a new lender for a better rate, or break your mortgage early (which involves a penalty).

Switching lenders at renewal is free — no penalties, no land transfer tax, and the new lender typically covers legal and appraisal costs. The only additional requirement is providing income documentation and a credit check to the new lender.

Staying with your current lender requires minimal paperwork — just signing the renewal document. But convenience should never cost you thousands of dollars in unnecessary interest.

Blend-and-Extend Option

If you want to take advantage of lower rates before your term is up, a blend-and-extend allows you to combine your current rate with the new market rate and extend into a new term — without triggering a prepayment penalty. This can be a smart move when rates have dropped mid-term, though the blended rate will always be higher than the market rate alone.

What Documents You Need

If you are switching lenders at renewal, your new lender will require standard documentation:

• Recent pay stubs (last 30 days)
• T4 slips and two most recent CRA Notices of Assessment
• Letter of employment confirming salary and position
• Current mortgage statement showing balance and maturity date
• Property tax bill
• Government-issued ID

Self-employed borrowers will also need business financial statements and potentially two years of T1 Generals. I help you gather and organize everything so the process is seamless.

Common Renewal Mistakes

• Signing the renewal letter without shopping: The most common and most expensive mistake.
• Ignoring the renewal letter entirely: Your mortgage auto-renews at the posted rate — the worst possible outcome.
• Focusing only on rate: Prepayment privileges, portability, and penalty calculations matter as much as rate.
• Waiting too long: Starting the process inside 30 days limits your options significantly.
• Not considering a shorter term: If you locked in for 5 years last time, a 2 or 3-year term might better align with your plans.

Renewing in Southern Ontario

Whether you are in Hamilton, Burlington, Brantford, St. Catharines, Caledonia, or the Kawarthas, the renewal process is the same — but local market conditions can affect your strategy. Property values in Hamilton and Burlington have stabilized after the 2022-2023 correction, meaning your home equity position may have shifted since your last term. I review your current equity, income, and goals to recommend the best renewal path.

Why Work With Dustin at Renewal?

I compare your renewal offer against rates from over 100+ lenders. In most cases, I can beat your lender’s offer by 0.25% to 0.75% or more. My service is free — lenders pay the broker fee. There is no cost and no obligation to have me review your renewal.