How Does Mortgage Renewal Work in Canada? A Complete Guide

Is your mortgage term coming to an end? While the idea of mortgage renewal may seem like another financial chore, it’s actually a valuable opportunity. You can reassess your financial goals, secure a better interest rate, and potentially save thousands over time—if you’re informed and proactive.

In this blog, we’ll walk you through how mortgage renewal works in Canada, what your options are, and how to handle challenges like renewal denial. Whether you’re renewing with your current lender or exploring other options, you’ll feel confident and ready to take the next step.

What Is a Mortgage Renewal?

A mortgage renewal happens when your current mortgage term expires and your remaining balance is carried over into a new term. Your lender will typically send you a renewal offer 3–6 months before your term ends, outlining the new interest rate and term length.

If You Accept the Offer:

You simply sign the agreement, and your mortgage continues under the new terms—no additional steps required.

If You Want to Make Changes:

You can negotiate new terms, switch lenders, or explore alternative mortgage products (more on this below).

What Are Your Options at Renewal Time?

You’re not locked into the same terms or even the same lender. When your mortgage is up for renewal, you have flexibility.

Here are your options:

1. Negotiate a Better Rate with Your Current Lender

Don’t just accept the first offer. Ask for a better rate—especially if you have a strong credit profile and solid payment history.

2. Adjust the Term Length

Choose a longer term to lock in a low rate, or a shorter term if you believe rates will fall.

3. Switch Lenders

This is a great time to shop around, especially if you're not satisfied with your lender's offer. Keep in mind: switching lenders means reapplying for a mortgage, which includes a credit check and submitting documents.

🛑 There are no penalties for switching lenders at renewal.

What Determines Your Mortgage Renewal Rate?

Lenders consider multiple factors when setting your mortgage renewal rate:

• Market Conditions: A strong economy usually means higher interest rates.

• Lender Competition: Banks and lenders may offer promotional rates to retain or attract clients.

• Your Credit Profile: A high credit score, low debt, and stable income improve your chances of getting a better rate.

• Loan-to-Value Ratio: If your mortgage balance is still high relative to your home’s value, you may be offered a higher rate.

Can a Mortgage Renewal Be Denied?

Yes, but it’s rare—especially if you've consistently made your payments. However, a lender can deny your renewal for reasons such as:

• Missed or late payments

• Poor credit score

• Major income loss

• High debt levels

What to Do If Your Mortgage Renewal Is Denied

If your mortgage renewal is denied, here are your next steps:

1. Contact Your Lender

Clarify why you were declined. It could be an error, especially if your credit report contains mistakes.

2. Strengthen Your Financial Profile

Work on reducing your debt and increasing your income—even short-term gains can help.

3. Refinance Instead

Consider extending your amortization or modifying your mortgage structure to ease your payments.

4. Work with a Mortgage Broker

Brokers can help you find alternative lenders, though rates might be higher depending on your risk profile.

How to Prepare for Your Mortgage Renewal

The key to a successful renewal is preparation. Here's a checklist to help you get started:

✅ Check Your Credit Score: Aim for a score above 740. If it’s lower, order reports from Equifax and TransUnion and dispute any inaccuracies.

✅ Review Your Finances: Assess your income, debts, and spending habits.

✅ Decide What You Want to Change:

• Switch from fixed to variable rate (or vice versa)

• Change your payment frequency (monthly, biweekly, weekly)

• Negotiate a lower interest rate

• Make a lump-sum principal payment (if allowed)

✅ Use a Mortgage Renewal Calculator: See how different scenarios affect your payments.

📌 Tip: If you don't respond to your lender’s offer, your mortgage may automatically renew under the proposed terms—which might not be the most competitive.

Final Thoughts

Mortgage renewal isn’t just a deadline—it’s a financial opportunity. Whether you choose to stay with your current lender or switch to a new one, doing your research and preparing in advance can make a significant difference.

If you’re approaching renewal and want personalized guidance, consider speaking to a mortgage professional or broker to explore your best options.