Mortgage Renewal
The short version
Your mortgage matures at the end of its term and has to be renewed, either with your current lender or a new one. The letter your lender mails you is an offer, not a bill, and it is rarely their best pricing. You can start shopping roughly 120 days before maturity, and at maturity there is no prepayment penalty to move, which makes this the cheapest moment in the whole life of a mortgage to change anything. A straight switch, moving the same balance to a new lender without adding to it, no longer requires passing the federal stress test, so switching is easier than it was a few years ago. Add to the balance or stretch the amortization and it becomes a refinance instead. Approvals are on approved credit.
Why renewal is the moment that matters
Most people negotiate hard when they buy and then sign the renewal letter without reading it. That is backwards. At renewal you have something you did not have as a buyer: no penalty, no deadline pressure from a seller, and a proven payment history the whole market can see.
Lenders know that most borrowers renew without shopping. Renewal offers are priced accordingly. It is not sinister, it is just what happens when an offer costs nothing to make and often gets accepted. A single phone call frequently improves the number, and having a competing approval in hand improves it considerably more.
When should you start?
About four months out. Most lenders will hold a rate for 120 days, so you can lock something in early and still move if a better offer appears before your maturity date. There is no downside to being early and a real one to being late.
Late means the letter arrives, the deadline is three weeks away, and you have no time to arrange an alternative. At that point signing is the only practical option, which is precisely the position the offer is designed to put you in. If your maturity is inside four months, that is the reason to call now rather than later.
What does switching actually involve?
Less than people expect. Your new lender pays out the old one and registers a new charge on title. There is no penalty because the term has ended. A straight switch usually costs a small discharge fee and modest legal work, and a large number of lenders cover those costs themselves to win the business.
The distinction that matters is switch against refinance. A switch moves the same balance on the same amortization. The moment you take equity out or extend the amortization it is a refinance, with full qualification and the costs that go with it.
Do you have to requalify?
For a straight switch, the federal stress test no longer applies. That rule changed in late 2024 and it removed the main obstacle that used to trap borrowers with their existing lender: previously you had to pass the stress test to leave, but not to stay, which meant the lender you were leaving had very little reason to compete.
You still need to qualify on income and credit, and the new lender still assesses the property. But the bar is meaningfully lower than it was, and more people can move than assume they can.
What if the payment jumps?
If you signed your last term in a much cheaper rate environment, renewal may bring a significant increase. That is a real problem and there are more levers than most people realize.
- Extend the amortization. Resetting back to a longer amortization lowers the payment. It costs more in total interest, and it is a legitimate tool when cash flow is the binding constraint.
- Consolidate other debt at the same time. If you are carrying credit cards or a car loan, the combined monthly cost after a consolidation is often lower than what you pay now, even with a higher mortgage payment.
- Look past the big banks. Credit unions, monoline lenders and B lenders all price differently and some will be considerably more accommodating than your current lender.
- Reconsider the term. Shorter terms sometimes price better, and they get you back to the market sooner if conditions improve.
Choosing your next term
We are not going to tell you where rates are heading, and you should be wary of anyone who does. What we can do is set out the trade honestly. A longer fixed term buys certainty and costs flexibility. A shorter term or a variable keeps your options open and leaves you exposed to movement.
The right answer depends on things that are knowable: how long you expect to keep the property, how much a payment increase would actually hurt, whether you might sell or refinance mid term, and how much you value not thinking about it. Run the numbers on our calculators, then let us walk through the options against your actual situation.
Model your renewal
See what your payment becomes at renewal and how a different term or amortization changes it.
Estimates only, not a rate offer or an approval. Approvals are OAC. See every calculator.
Common questions
When should I start looking at my renewal?
About 120 days before maturity. That is when most lenders will hold a rate for you, so you can secure something early and still take a better offer if one appears before closing. Waiting for the letter to arrive gives you no leverage and very little time.
Is my lender offering me their best rate?
Usually not in the first letter. Renewal offers are priced on the assumption most people sign without shopping, and enough people do that the approach works. The offer frequently improves once the lender knows you have somewhere else to go.
Does it cost anything to switch lenders at renewal?
There is no prepayment penalty at maturity because the term has ended. A straight switch usually involves modest legal and discharge costs, and many lenders cover them to win the business. Taking equity out at the same time makes it a refinance rather than a switch, with the costs that go with one.
Do I have to requalify to switch?
For a straight switch, moving the same balance and amortization to a new lender, the stress test no longer applies. You still need to qualify on income and credit, but the bar is lower than it was. If you increase the balance or extend the amortization it becomes a refinance and full qualification returns.
What if my financial situation has got worse since I last qualified?
Tell us early. Options narrow as maturity approaches, and there is a real difference between having four months to work on it and four days. Alternative lenders exist precisely for files that no longer fit a bank template.
Should I take a shorter term this time?
It depends on what you expect and what you can tolerate. A shorter term gets you back to the market sooner, a longer one buys certainty. That is a judgment call about your circumstances rather than a prediction, and we will walk through both sides rather than tell you what rates will do.