Can I Switch Lenders When Renewing My Mortgage in Canada?
Yes, you absolutely can switch lenders when your mortgage is up for renewal in Canada, and in many cases, it can be a smart move. If your current mortgage term is ending and you’re not happy with the rate or service from your current lender, renewal is your best chance to shop around without penalty. Here’s what you need to know about how it works, what to watch out for, and when it makes sense.
Why Switching Lenders at Renewal Is Easier Than You Think
Unlike breaking a mortgage mid-term, switching lenders at the time of renewal involves no prepayment penalties. That makes it the cleanest opportunity to compare offers from different lenders and move without extra cost.
Your new lender will still need to approve you under current lending guidelines, but you’re not starting from scratch. You already have a track record of mortgage payments, and many lenders compete aggressively for good clients during renewal season.
Most Canadians receive a renewal offer from their existing lender 30 to 120 days before the term expires. That offer might include a slightly discounted rate, but it usually won’t be the lowest rate you qualify for. Lenders rely on you accepting out of convenience.
What You Need to Switch Lenders at Renewal
To make a switch at renewal, you’ll need to go through a basic approval process with your new lender. That includes submitting:
- Proof of income (pay stubs, T4s, or tax returns if self-employed)
- Government-issued ID
- A recent mortgage statement
- Property tax bill
- Home insurance documents
Your credit score will also be checked, and lenders typically look for scores above 650. If your financial profile has weakened since your original approval, your options may be more limited. But if your situation has improved or stayed steady, you’re in a strong position to switch.
Some lenders may also cover part or all of your switching costs, such as the appraisal or legal fees, especially if you have a solid mortgage amount (typically $250,000 or more).
Pros and Cons of Switching Lenders at Renewal
Let’s break down when switching lenders makes sense, and when it might not.
| Pros | Cons |
| Access to better interest rates | You’ll need to requalify |
| More flexibility in terms | New paperwork required |
| Ability to change features (e.g., prepayment privileges) | Credit check may lower score slightly |
| Possibly better service | Appraisal/legal fees if not covered |
For example, if your current lender offers a 5-year fixed at 5.69% but another lender offers 5.29% for the same term, you could save thousands over the term by switching. Over $300,000 amortized over 25 years, even a 0.4% difference can mean roughly $6,000 in interest saved over 5 years.
Tips to Maximize Your Renewal
- Start early: Begin comparing rates and speaking with brokers at least 60 days before your renewal date.
- Get multiple quotes: Don’t rely on your current lender’s offer without comparing it to others.
- Ask about transfer costs: Some lenders offer “switch programs” that make the process seamless and cover key costs.
- Lock in a rate early: If rates are expected to rise, you can often secure a new lender’s rate up to 120 days in advance.
- Use a mortgage broker: Brokers can access multiple lenders and handle the paperwork for you.
When It Might Make Sense to Stay
Switching isn’t always the better choice. You might stick with your current lender if:
- You’re happy with the service and terms
- The rate offered is already competitive
- Your credit situation has changed negatively
- Your mortgage balance is small (making savings from switching minimal)
That said, even if you plan to stay, it pays to negotiate. Let your lender know you’re shopping around—they may lower their rate just to keep your business.
Conclusion
Switching lenders at mortgage renewal is one of the few times in your mortgage journey where you have full control without extra cost. If you’re looking for better rates, flexible features, or improved service, it’s worth exploring your options.
By comparing offers and planning ahead, you could save thousands over the life of your mortgage. With today’s higher interest rate environment, every basis point counts. Switching lenders at renewal is a powerful financial move, and one that Mortgages365 can help you navigate with confidence.
Need help reviewing your mortgage renewal options?
Reach out to Mortgages365 for a consultation!
Best