Roughly 70% of Canadians sign their bank's first renewal letter without shopping it. That's the single most expensive financial mistake most homeowners make. Here's how the renewal process actually works, what your bank isn't telling you, and the 120-day playbook to beat their first offer by 30-60 basis points.
The auto-renewal trap — what your bank is counting on
Every Canadian mortgage matures. Most matter 4-6 weeks before maturity, your bank mails you a renewal letter with an offered rate, a new term, and a single line: “If you take no action, your mortgage will automatically renew at the rate above for the term selected.” Most Canadians take no action.
Recent CMHC + Bank of Canada surveys put the rate of un-shopped renewals at roughly 65-70% of all renewals. That number is the single most profitable line item in Canadian retail banking. Every basis point those 70% accept above the competitive rate is pure margin. The math on capturing 70% of renewals at 30-50 bps over fair value, across 1 million renewals a year, is in the billions.
The 120-day renewal playbook
The federal regulatory framework lets you transfer your mortgage to a new lender at maturity with no prepayment penalty. The 120-day rate-hold window before maturity is your shopping period. Here's exactly what to do, week by week.
Day -120 to -90: Start shopping
Your bank's renewal letter typically arrives 4-6 weeks before maturity. Don't wait for it. The day you cross the 120-day threshold, ask a broker to start benchmarking the market for your file. They'll need: your current rate, balance, maturity date, lender, and a basic income picture.
Within 24-48 hours we present 2-3 best-fit lenders with offered rates in writing. You see the comparison before your bank has even drafted their letter.
Day -90 to -60: Lock a rate hold
Most A-lenders hold rates for 90-120 days. When you find one you like, lock it. If rates drop before you fund, we re-shop and capture the lower one. If rates rise, the hold protects you. The lock is one-directional — it floats down, fixed against you.
Even if you haven't decided to switch yet, locking a hold gives you a real competing offer in hand when your bank's renewal letter arrives.
Day -60 to -30: Get your bank's letter, benchmark, negotiate
Your bank's letter will arrive in this window. Forward it to us. We benchmark it against the held rate and against the current market. In ~80% of cases the bank's first offer is 20-60 bps above what we can get you elsewhere.
You now have two options: (a) take our written competing offer to your bank as a retention negotiation, OR (b) accept our offer and switch. We don't push you either way; we present the math.
Day -30 to 0: Sign or switch
If your bank matches the competing offer (which they sometimes do), the simplest path is to sign with them — no new paperwork, no switching costs. If they don't match, we transfer the mortgage. The new lender pays the discharge fee and appraisal as a transfer incentive on most A-lender transfers.
The transfer paperwork takes ~7-14 business days. We coordinate with the old lender's discharge desk, the new lender's underwriting, and the lawyer (if registration is needed; many transfers are now no-legal via Mortgage Loan Discharge Network).
Staying vs switching — the math + the non-math
Staying with your existing lender is the path of least resistance. No re-qualification, no transfer paperwork, no discharge timing. If your bank matches a competitive market rate, staying is genuinely fine.
Switching unlocks two things staying doesn't: (1) typically a better rate (because the new lender wants your business and is willing to pay for it), and (2) the option to restructure — extend amortization, consolidate debt, take out equity. The cost of switching is mostly paperwork; the financial cost is usually $0 on A-lender transfers.
| Factor | Stay (re-sign) | Switch (transfer) |
|---|---|---|
| Re-qualify under stress test | Usually no | No on a straight switch; yes if adding money |
| Discharge / setup fees | $0 | $0 (covered by new lender) |
| Appraisal | Not required | Usually not required |
| Legal cost | $0 | $0 on most A-lender transfers |
| Typical rate vs market | Bank's first offer (often +30-60 bps) | Best available |
| Restructure (extend amort, take equity) | Limited | Full flexibility |
| Time to close | 1-3 days | 7-14 business days |
Straight switches — no stress test since November 2024
Since November 21, 2024, federally regulated lenders don't have to apply the OSFI B-20 stress test (contract rate + 2% or 5.25%, whichever is greater) to a straight switch at renewal, for insured and uninsured mortgages alike. The new lender still reviews your credit, income and property, so approval isn't automatic.
A straight switch means the new lender takes the same balance, same amortization, same property — essentially a like-for-like transfer with a new lender on title. Add money or extend the amortization and it's new lending, so the stress test applies; in that case some provincially regulated credit unions still qualify on contract rate.
Fixed vs variable at renewal in 2026
The fixed vs variable question is harder at renewal than at first purchase because your existing rate (whichever way it broke) is the baseline. If you were variable for 2022-2026 and rode the rate-hike cycle, fixed feels safer. If you were fixed and watched variable drop, variable feels smarter. Recency bias matters; the math doesn't care.
Mid-2026 setup: 5-year fixed at ~4.19% insured, variable at ~4.04% insured. Variable is currently 15 bps cheaper. BoC has signalled one more cut likely, then hold. Bond market is roughly aligned. Variable favours probabilistically; fixed gives certainty.
For renewal specifically — where you've already lived through a rate cycle — most clients can stomach variable better than they think. Run the math both ways with our payment calculator; the decision should fall out of the math, not gut.
Renewal vs refinance — when to do which
A renewal rolls your existing balance into a new term at a new rate. Same amortization, same loan size (minus paid-down principal). No equity take-out, no debt consolidation. This is the simplest path.
A refinance restructures the mortgage. Bigger balance (rolling in debt or extracting equity), new amortization, sometimes new property type. More flexibility, slightly more cost, requires re-qualification.
At maturity, you can do either with no breakage penalty. Most renewing borrowers do the simpler renewal because their file hasn't changed. But if you have $20K+ of high-interest debt, or you need home equity for a defined purpose, the refinance path often wins materially. We model both for every renewal file.
Common renewal mistakes Canadian homeowners make
- Signing the renewal letter the day it arrives — that's the first offer, not the best. Always wait. Always shop.
- Calling your bank to negotiate before having a competing offer — the conversation goes nowhere without leverage. Get the broker's written offer first.
- Not considering a refinance scenario — if your file has changed (debt, income, family, equity), a refi can be materially better than a straight renewal.
- Accepting a longer term ‘for stability’ — 7-yr and 10-yr terms are almost always priced 30-70 bps above 5-yr. The ‘stability premium’ rarely justifies the cost.
- Letting the bank auto-renew without comparing — even a 30-day notice gives us room to bring a competing offer.
- Forgetting the loyalty rate — if Mortgage Squad Advisors funded your previous mortgage, your Renewal Loyalty Rate is automatic. Mention it.
Your next step
If you're within 120 days of your renewal — or you're within 60 days and your bank's letter is already in hand — the most productive next step is forwarding the letter to us. We benchmark it against 100+ lenders within 24 hours and email you a written comparison. No bureau pull. No commitment.
Beyond 120 days out? Use our renewal comparison calculator to see what you'd save at today's market rates vs your current rate.
Frequently asked questions
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