Your renewal letter may not offer your lender’s best rate. In a rising-rate market, lock a rate hold early, then negotiate with competing offers in writing before you sign anything.
The letter arrives, and after the Bank of Canada’s October 28 hike, the rate probably looks higher than your current one. Many people sign it without shopping around.
The Financial Consumer Agency of Canada (FCAC) says you may qualify for a better rate. Here’s how to lock, negotiate and time it.
What Your Renewal Letter Is (and Isn’t)
If you have a federally regulated lender, it must send your renewal statement at least 21 days before your term ends. If it doesn’t plan to renew you, it has to give you the same notice. According to the FCAC, the statement must show:
- Your balance at renewal
- The interest rate offered
- Your payment frequency
- The term length
- Any fees
- A confirmation that the offered rate won’t go up before your renewal date
Twenty-one days isn’t much time to compare lenders and get approved. Treat the letter as a deadline reminder, not a starting gun.
Will my mortgage automatically renew?
It may. Some lenders renew your mortgage automatically if you don’t respond, and if yours plans to, the statement has to say so.
In practice, doing nothing means accepting the lender’s terms. Some borrowers report nearly renewing by accident in a banking app, so read the full offer before you click.
Check more than the rate
The letter rate is a ceiling until renewal, not a floor. Ask whether your lender can go lower.
Compare every line against your current mortgage: remaining amortization, term length, payment amount and fees. Watch for an extended amortization: it may lower payments but increase total interest.
Why the First Offer Usually Isn’t the Best
Lenders know many people don’t shop. FCAC’s 2026 research on renewal decisions found that:
- 20% of borrowers didn’t compare lenders at all
- 37% chose their lender mainly because they already banked there
- 13% didn’t know they could negotiate
When asked what would get them to switch lenders, 77% named a better interest rate. That’s the leverage. Your lender just needs to believe you’ll actually use it.
Renewal pricing can trail new-client offers, though not universally. See why shopping around at renewal matters.
What a small rate gap costs
This illustrative example assumes hypothetical rates of 4.44% versus 4.14%, a 25-year amortization and Canadian semi-annual compounding: a 0.30-percentage-point gap.
| Balance | Monthly saving
|
Interest saved over a 5-year term
| | --- | --- | --- | | $300,000 |
~$50
|
~$4,300
| | $500,000 |
~$83
|
~$7,200
| | $750,000 |
~$124
|
~$10,800
|
These aren’t current market rates. The point is scale: on $500,000, a 0.30-point gap could cost about $7,200 over five years.
Lock First: Timing Your Renewal in a Rising Market
Start about four to six months before your maturity date. Big banks such as RBC and TD let you renew without a penalty as early as 120 days before maturity, and some lenders allow longer. Lock in as soon as you’re inside your lender’s window. Each lender sets its own policy, so ask yours for the exact timing.
With more borrowers choosing shorter terms, you may face this decision every few years. See 91% of Borrowers Now Skip the 5-Year Fixed.
How a rate hold works
If rates rise before renewal, you typically keep the held rate. If they fall, ask for a lower rate; policies vary.
Confirm the hold’s conditions before committing. A hold can protect against increases while you shop.
Why act now
The Bank of Canada raised its policy rate to 2.50% on October 28, its first hike since July 2023. Prime at the big banks rose to 4.70%. Fixed rates follow bond yields, which have been climbing since late February, and the next rate decision is December 9.
Nobody can promise where rates go next. A rate hold is risk management, not a bet.
Renewing earlier than your lender’s renewal window can trigger a prepayment penalty. See Mortgage Renewal: Rate Holds and Break Penalties and what mortgage prepayment penalties are.
Then Negotiate: A 5-Step Playbook
Use your held rate as a backstop while you negotiate.
- Get competing offers in writing. Borrowers often find banks reluctant to put quotes on paper. A broker’s written quote or another lender’s rate hold confirmation gives you something concrete to show.
- Call your lender’s renewal or retention team, not just your branch. Ask: “What’s the best rate you can offer to keep my mortgage?” If the first answer doesn’t move, ask whether a renewal specialist can review it.
- Share the competing offer. FCAC suggests telling your lender about other offers and notes you may need proof. A verbal quote carries far less weight.
- Compare total cost, not just the rate. Look at the term, amortization, prepayment privileges, penalty calculation, porting rules and fees. One borrower passed on a lower rate because its porting terms were too restrictive.
- Get the final offer in writing before you sign. Check that nothing else changed, especially the amortization and payment amount.
If They Won’t Move: Switching Lenders
When your term matures, you can typically move your mortgage to another lender without a prepayment penalty. The new lender still has to approve you, so leave enough time for paperwork.
OSFI generally exempts uninsured switches at renewal between federally regulated lenders from its minimum qualifying rate if neither the loan amount nor amortization increases. Confirm current rules with your new lender.
Switching can come with costs. FCAC lists possible costs such as:
- Discharge, registration, transfer or assignment fees
- An appraisal
- Administrative fees
- A new mortgage insurance premium if you increase the loan amount or extend the amortization
For a straightforward switch of a standard-charge mortgage, many lenders cover some or all of these to win your business. Ask for the covered costs in writing.
If your mortgage is registered as a collateral charge, switching can cost more. Every loan secured by that charge, such as a home equity line of credit, must be paid off or moved too.
Before you switch, read Top Mistakes to Avoid When Changing Lenders at Renewal and The Ultimate Guide to Switching Mortgage Lenders at Renewal.
Fixed or Variable This Time?
It depends on how much room your budget has and how much risk you can live with. Even after the hike, variable rates are often priced below fixed, but your payment or interest cost moves with prime.
If you’re leaning toward fixed because the economy feels uncertain, read Locking In Because the Economy Feels Shaky?. If you qualify for a variable but not a fixed, see Approved for a Variable but Not a Fixed?.
Your Renewal Timeline
Work backwards from maturity, not the day your letter arrives:
| When | What to do | | --- | --- | | 6 months out | Check your maturity date, balance and remaining amortization. Set a reminder. | | About 120 days out | Get quotes and lock a rate hold. | | 60 to 90 days out | Negotiate with your lender using written offers. | | 21+ days out | Your renewal statement arrives. Compare it line by line. | | Before maturity | Sign the best offer, or start the switch. Leave time for approval and legal work. |
Already inside 120 days? Get quotes and ask for a rate hold this week.
Treat the Letter as a Starting Point
Before signing, ask your lender to respond to a written competing offer. A rate hold can protect you while you compare.
Homewise compares renewal offers from multiple lenders at no cost to you, and we can help secure a rate hold while you decide. Start by checking today’s numbers on our rate table, then talk to a Homewise mortgage expert before you sign.
General information, not personal financial advice. Lender policies and government rules can change; confirm details with a mortgage professional.
FAQs
Will my mortgage automatically renew if I do nothing?
If your lender plans to renew automatically, your statement has to say so. If you don’t respond, you may accept its terms.
When should I lock in my mortgage renewal rate: 6 months before or closer?
Start shopping about four to six months out. Big banks such as RBC and TD let you renew without a penalty as early as 120 days before maturity, and some lenders allow longer. Ask yours for its exact window and lock in once you’re inside it.
Why are mortgage renewal rates typically worse than the rates offered for new mortgages?
Not every lender does this, but lenders often save their sharpest pricing for borrowers they need to win, and they know many renewing borrowers don’t shop. A competing written offer is usually the best way to close that gap.
How can I get a written mortgage quote when banks won’t provide one?
A mortgage broker’s written quote or another lender’s rate hold confirmation can work as proof. FCAC notes your lender may ask to see evidence of a competing offer.
Do I need to pass the stress test to switch lenders at renewal?
OSFI generally exempts uninsured renewal switches between federally regulated lenders from its minimum qualifying rate if neither the loan amount nor amortization increases. You still need lender approval; confirm current rules before applying.
