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Mortgage Renewal In Canada: Everything You Need to Know

Is your mortgage term coming to an end? It’s time to renew—and potentially save.

Mortgage renewal isn’t just a routine step; it’s a strategic opportunity. Whether your life circumstances have changed or the market has shifted, renewing your mortgage allows you to revisit your goals, adjust your payment strategy, and even switch lenders to find a better fit.

In this guide, we’ll walk you through what a mortgage renewal is, how it works in Canada, and the essential steps to take so you can make informed decisions about your next term.

In this article:

What Is a Mortgage Renewal?

A mortgage renewal happens when your current mortgage term ends and you still have a balance remaining. In Canada, most mortgages are structured with an amortization period (usually 25 to 30 years) broken into shorter terms—typically 1, 3, or 5 years. That means you’ll likely go through the renewal process multiple times before your mortgage is paid off in full.

At the end of each term, you must either:

  • Renew your mortgage with the same lender,
  • Switch to a different lender, or
  • Pay off the mortgage in full (if you’re in a position to do so).

Renewing allows you to re-evaluate key mortgage terms such as:

  • Interest rate
  • Payment frequency
  • Length of the new term
  • Amortization period (in some cases)

Failing to review your renewal options could mean missing out on better rates or terms that align with your financial goals

How Does Mortgage Renewal Work?

When your mortgage term ends, your lender will typically send you a mortgage renewal statement. This document outlines:

  • Your outstanding mortgage balance
  • The proposed interest rate
  • The term length
  • Your payment frequency

At this point, you have three options:

  1. Accept the offer and sign the renewal form.
  2. Negotiate better terms with your current lender.
  3. Shop around and switch to another lender offering a more favourable deal.

Do I need to requalify at renewal?

If you’re renewing with your existing lender, you typically won’t need to requalify—especially if your financial situation hasn’t changed. However, if you switch lenders, you will likely need to go through a full approval process again, including a credit check, income verification, and updated documentation.

What paperwork do I need to renew my mortgage?

If you’re staying with your current lender, little to no paperwork may be required. But switching lenders involves a bit more prep. 

You’ll likely need:

  • Recent mortgage statement
  • Proof of income (e.g., pay stubs or NOAs)
  • Property tax details
  • Government-issued ID
  • Proof of home insurance

Your broker can help you organize this efficiently.

Should I accept the offer or negotiate a better rate?

When your lender sends a renewal offer, it may seem easiest to sign and return it. But convenience can come at a high cost. Most lenders present a posted rate—which is typically higher than what’s available through negotiation or third-party lenders.

Instead of automatically accepting:

1. Start shopping around 3–4 months before renewal.

The earlier you compare rates, the better your position to negotiate. Many lenders count on borrowers accepting the first offer without question.

2. Use competitive offers as leverage.

 If another lender gives you a better rate or more favourable terms, take that back to your existing lender. They may match or even beat the offer—but you have to ask.

3. Don’t be afraid to negotiate.

 Even if you’re not switching lenders, asking for a better rate can save you thousands over your next term.

Tip: A mortgage broker (like The Mortgage Station team) can compare options from multiple lenders and help you secure more competitive rates, often at no cost to you.

Typical Timeline for Mortgage Renewal in Canada

Understanding when and how to prepare is crucial for a smooth, stress-free mortgage renewal.

120 Days Before Term Ends

Most lenders will let you renew your mortgage early—up to 120 days in advance—without penalty. This window is ideal for reviewing your options, speaking with a mortgage broker, and beginning negotiations.

21 Days Before Maturity

Federally regulated lenders (like major Canadian banks) are legally required to provide you with a renewal offer at least 21 days before your current term ends.

However, this offer may not reflect the most competitive rate. Many lenders rely on clients accepting the default offer without doing their research. That’s why it’s critical to start early.

Will My Mortgage Automatically Renew?

Yes—and no. Some lenders may automatically renew your mortgage if they don’t hear from you. This might sound convenient, but here’s the catch:

Auto-Renewal Risks:

  • You may be locked into a higher interest rate.
  • You lose the opportunity to negotiate better terms or switch lenders.
  • You might miss the chance to adjust your amortization or payment schedule.

Avoid automatic renewal by planning ahead and working with a mortgage broker who can help you assess your options well in advance.

Can You Renew Your Mortgage Early?

Yes, in many cases you can renew your mortgage early—typically up to 120 days before your current term ends—without triggering a prepayment penalty. This early renewal window gives you time to explore better rates and prepare for your next term without the last-minute pressure.

Why Consider Early Mortgage Renewal?

  • Lock in a lower rate: If interest rates are expected to rise, renewing early could secure a more favourable rate and save you money over the next term.
  • Simplify future planning: Early renewal is helpful if you’re anticipating major life events—such as a home renovation, job change, or growing family.
  • Avoid stress: Finalizing your next mortgage term ahead of time gives you peace of mind and more control over your finances.

Tip: Ask your lender or mortgage broker about early renewal timelines—they may vary depending on the provider.

Watch for Prepayment Penalties

If you attempt to renew before the 120-day window, your lender may charge a prepayment penalty. This is why it’s important to:

  • Check your original mortgage agreement for prepayment terms
  • Speak with a licensed mortgage broker who can guide you on the best timing for early renewal

How to Calculate Your Mortgage Renewal Payment

Your renewal payment depends on several factors:

  • Remaining balance on your mortgage
  • New interest rate
  • Length of the new term
  • Payment frequency
  • Changes in your amortization period

What tools can help estimate my new payments?

Use a mortgage payment calculator that includes fields for interest rate, amortization, and frequency. This gives you a clearer idea of what to expect. A broker can walk you through different rate scenarios to find your best option.

Tip: If interest rates have risen, your monthly payments may increase—even if your principal has decreased.

Want to understand how lump sum payments affect your principal?

Check out: How Lump Sum Payments Affect Your Mortgage

What If Your Mortgage Renewal Is Denied?

It’s rare, but yes—a lender can deny your mortgage renewal, especially if your financial situation has changed significantly.

Common Reasons for Denial:

  • Missed or late payments
  • Declining income or unstable employment
  • Low credit score
  • Significant increases in debt

What To Do If Your Mortgage Renewal is Denied:

  1. Talk to your current lender: They may still offer a short-term solution or help you qualify under new terms.
  2. Work with a mortgage broker: Brokers have access to alternative lenders, such as B-lenders or private lenders, who specialize in unique financial situations.
  3. Focus on improving your financial profile: Rebuild your credit, reduce outstanding debts, and increase your down payment if possible. This can improve your chances of approval with more lenders.

Facing mortgage renewal uncertainty?

Learn more: What Happens If Your Mortgage Renewal Is Denied?

Can You Change Your Amortization Period at Renewal?

Yes—renewal time is one of the few opportunities when you can adjust your amortization period without facing a penalty.

This can be a strategic move, especially if your financial situation has changed since your original mortgage term.

Why Adjust It?

Shorten the amortization

If you’ve had a boost in income or want to become mortgage-free faster, shortening your amortization period means:

  • You’ll pay off your mortgage sooner.
  • You’ll pay significantly less interest over the life of the loan.
  • Your monthly payments will increase, so ensure they’re manageable.

Extend the amortization

If your monthly cash flow is tight, increasing your amortization can reduce your payments. But there’s a tradeoff:

  • Lower monthly payments offer short-term relief.
  • You’ll pay more interest overall—possibly tens of thousands of dollars over time.

Thinking of extending your amortization to lower payments?

The Financial Consumer Agency of Canada (FCAC) cautions that this can lead to significantly higher interest costs across the life of your mortgage. Make sure the short-term gain aligns with your long-term financial goals.

Important: Regardless of which direction you go, your lender will review your finances to ensure you can afford the new payment structure. If your goal is to reduce total borrowing costs and become mortgage-free sooner, adjusting your amortization, particularly shortening it, could be a smart decision at renewal.

Can I Consolidate Debt at Renewal?

If you’re carrying high-interest debt—like credit cards or personal loans—you may be able to consolidate that debt into your mortgage at renewal. This can:

  • Simplify your payments
  • Reduce your overall interest costs
  • Improve monthly cash flow

Keep in mind: You’ll need to requalify for the higher loan amount, and your lender will assess your ability to carry the increased balance. A mortgage broker can help you determine if debt consolidation at renewal is a smart strategy for your situation.

Can I Add or Remove Someone From My Mortgage at Renewal?

Whether you’re going through a separation or bringing on a co-owner (like a spouse or family member), renewal is a common time to make changes to who’s on the mortgage.

To do this, you’ll generally need to:

  • Requalify under the new borrower arrangement
  • Submit updated documentation and credit history
  • Ensure both parties meet income and liability requirements

This process can take time, so start early and talk to your mortgage broker for support.

Paying Off Your Mortgage at Renewal: Any Penalties?

In most cases, you can pay off your entire mortgage at renewal without penalty, because your term has ended and you’re no longer locked into a contract.

Good Times to Pay Off Your Mortgage Include:

  • You’ve received an inheritance or windfall.
  • You’ve sold another property.
  • You’re downsizing or retiring.

If you’re not able to pay it all off, consider making a lump sum payment to reduce the principal and lower your future interest costs.

Trying to become mortgage-free faster?
You might like: Short-Term vs. Long-Term Mortgages: Which One Saves You More?

Do I Need Mortgage Insurance If I Switch Lenders?

If you originally had mortgage loan insurance, such as CMHC, Sagen™, or Canada Guaranty coverage, you may be required to pay a new insurance premium when switching lenders.

This usually applies if:

  • You’re increasing your loan amount, or
  • You’re extending your amortization period

To avoid paying twice, tell your new lender that you already have mortgage insurance in place. Provide your insurance certificate number, which you can request from your existing lender or find in your original mortgage documents.

Tip: Mortgage loan insurance protects the lender, not the borrower, when you have less than a 20% down payment. If you’re switching lenders and still owe more than 80% of your home’s value, this step is essential to avoid unexpected costs.

What Happens If I Don’t Renew My Mortgage?

If you ignore your mortgage renewal, it won’t just disappear—your lender will take action.

Here’s what might happen:

  • Auto-renewal: You may be placed into a short-term, high-interest open mortgage—without your consent.
  • Legal complications: Missing your renewal entirely could lead to default and potential foreclosure proceedings (in extreme cases).

Bottom line: Don’t ignore your mortgage renewal. Even if your situation is complicated, options exist—and starting early gives you time to explore them.

Will a Consumer Proposal Affect My Mortgage Renewal?

Yes, a consumer proposal can impact your mortgage renewal in Canada.

While your existing lender may still renew, they might offer less favourable rates or request additional documentation to assess your financial stability.

What You Can Do:

  • Work with a mortgage broker to identify lenders who specialize in working with clients recovering from credit issues.
  • Demonstrate good payment history since filing your proposal.
  • Consider rebuilding your credit with secured cards or low-limit accounts before renewal.

Dealing with credit issues or debt?

Read next: Can I Get a Mortgage with Bad Credit in Canada?

Mortgage Renewal Quick Takeaways

  • Start shopping around 3–4 months before your term ends.
  • Don’t accept the first offer—negotiate or compare.
  • You don’t need to requalify if staying with the same lender.
  • You can adjust your amortization or pay off your mortgage without penalties.
  • Talk to a broker for better rates and fewer headaches.

Make Your Next Mortgage Term Work for You

Mortgage renewal in Canada is more than a routine step—it’s a powerful opportunity to reassess your financial goals, secure better rates, and move forward with a plan that works for your life today.

Whether you’re approaching your renewal date or thinking about early renewal, The Mortgage Station is here to help. We compare offers from over 50 lenders, negotiate on your behalf, and ensure your next term fits your goals—without the stress.

Reach out to our expert team.

Contact Us Today

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by | Jun 10, 2025 | Uncategorized