If your mortgage is coming up for renewal in 2026 or 2027, you’re not alone. About 1.15 million Canadian mortgages are expected to come up for renewal in 2026, followed by another 940,000 in 2027, according to CMHC projections. Many of these mortgages were taken out in 2020 and 2021, when five-year fixed rates were often around 1.5% to 2.5%. With mortgage rates now much higher, some homeowners could see their monthly payments increase by several hundred dollars when they renew.
So, what should you do when your mortgage comes up for renewal? You generally have three main options: renew with your current lender, switch to a new lender, or refinance your mortgage. The right choice depends on your current rate, financial situation, home equity, credit profile, and what you need from your mortgage going forward.
In this guide, we’ll explain how mortgage renewal works in Canada, what to expect from current mortgage rates, and how much your payment could change with real examples. We’ll also look at the mortgage stress test and the 2024 changes, when you should start preparing for renewal, and what options may be available in Ontario if your new mortgage payment is no longer affordable.
The goal is simple: help you understand your options before you sign a mortgage renewal offer, so you can make a more informed decision about your next term.
- Renew with your current lender if their offer is within about 0.10% of the best rate you can find elsewhere and your priority is simplicity. It’s typically the fastest option and, in most cases, doesn’t require you to requalify under the mortgage stress test.
- Switch lenders if a broker or competing bank can beat your renewal offer by 0.15%–0.30% or more. Since November 21, 2024, OSFI no longer requires straight lender switches (same balance, same amortization) to pass the stress test, which has made switching far more common.
- Refinance only if you need to do more than renew — for example, pulling out equity, consolidating higher-interest debt, or extending your amortization. Refinancing is a new mortgage, so it does require stress-test qualification and can trigger a prepayment penalty if you break your term early.
- Start the process 120 days before your maturity date. That’s the window most lenders use to hold a rate, and it gives you time to get competing quotes before you’re forced to accept whatever your bank mails you.
Mortgage Renewal Calculator
Compare your current payment against upcoming renewal rates to anticipate payment changes.
Renewal Details
Payment Comparison
Renew vs. Refinance vs. Switch: What's the Difference?
| Renewal | Refinance | Switch | |
|---|---|---|---|
| What it is | Continuing your existing loan at a new rate/term | A brand-new mortgage, often with a new amount or amortization | Moving your existing loan (same balance, same amortization) to a new lender |
| Loan amount | Stays the same | Can increase up to 80% loan-to-value | Stays the same |
| Stress test required? | Usually not, if staying with the same lender | Yes | Usually not, since Nov. 21, 2024 (straight switches only) |
| Typical cost | ~$0 in fees | Legal, appraisal, and admin fees (~$1,000–$3,500) | Modest legal/discharge fees; often lender-covered |
| Prepayment penalty | None, if done at maturity | Applies if you break your term early | None, if done at maturity |
| Best for | Homeowners happy with their current rate and lender | Homeowners who need extra funds or to restructure debt | Homeowners chasing a meaningfully better rate |
2026 Mortgage Rate (Updated September 2026)
| Rate Type | Current Rate (Sept 2026) | Notes |
|---|---|---|
| Bank of Canada policy (overnight) rate | 2.25% | Held since late 2025; most recent decision Sept. 2, 2026 |
| Prime rate (Big Six banks) | 4.45% | Directly sets variable-rate mortgage pricing |
| Best 5-year variable (insured, via broker) | ~3.35% | Roughly prime – 1.10% |
| Best 5-year fixed (insured, via broker) | ~4.04%–4.09% | Lowest advertised broker rates |
| Best 5-year fixed, Big Six banks | ~4.24%–4.99% | Big banks typically price 0.25%–0.75% above broker rates on renewal letters |
| Stress-test qualifying rate (refinance/switch outside straight-switch rules) | Greater of contract rate + 2%, or 5.25% | Set by OSFI's B-20 guideline |
| Maximum refinance loan-to-value | 80% | Cannot exceed this on a refinance |
Rates change daily and vary by insured/uninsured status, amortization and lender. Treat these as a snapshot and confirm current pricing before deciding.
Big bank 5-year fixed comparison (approximate, confirm before applying):
| Lender | Approx. 5-Yr Fixed | Approx. 5-Yr Variable |
|---|---|---|
| RBC | 4.79%–4.99% | 4.45%–4.60% |
| TD | 4.79%–4.99% | 4.45%–4.60% |
| Scotiabank | 4.24%–4.49% | 4.45%–4.55% |
| BMO | 4.69%–4.94% | 4.45%–4.60% |
| CIBC | 4.69%–4.94% | 4.45%–4.60% |
| National Bank | 4.59%–4.89% | 4.45%–4.55% |
| Broker/monoline lenders | 4.04%–4.29% | 3.35%–3.60% |
Posted rates are almost always negotiable — very few borrowers should pay a bank’s first-quoted number.
Option 1: Renew With Your Current Lender
Renewing is the default path: about 30 to 90 days before your term ends, your lender sends a renewal letter with a new rate. Sign it, and your mortgage continues on the same balance and amortization.
Pros
- No new application, no stress test, no legal fees in most cases
- Fastest option — can be done in minutes
- No risk of a coverage gap between mortgages
Cons
- Renewal letters are rarely a lender’s best rate — banks bank on inertia, and more than 70% of Canadians sign the first offer they receive
- You lose leverage if you don’t shop minutes
When it makes sense: your lender’s offer is competitive (within roughly 0.10% of the best broker rate),
Option 2: Refinance Your Mortgage
A refinance replaces your mortgage entirely. It’s the right tool when renewal alone won’t solve your problem — for example, you want to consolidate high-interest debt, fund a renovation, help a family member, or extend your amortization to lower your payment.
Pros
- Can access up to 80% of your home’s current value
- Can restructure amortization, term, and lender all at once
- Can consolidate higher-interest debt into a lower mortgage rate
Cons
- Requires full stress-test qualification at the greater of contract rate + 2% or 5.25%
- Triggers a prepayment penalty if you’re breaking your term mid-cycle (can reach five figures on a large fixed-rate mortgage)
- Legal, appraisal, and discharge fees typically add $1,000–$3,500
When it makes sense: you need more than just a rate reset — new funds, debt consolidation, or a longer amortization to bring your payment down.
Option 3: Switch to a New Lender
Switching means moving your existing balance and amortization to a new lender at maturity, with no new money added. This is where most of the savings conversation in 2026 lives.
The rule change that matters: since November 21, 2024, OSFI no longer requires a stress test for a straight lender switch — same balance, same amortization, no additional funds. That single change removed the biggest historical barrier to shopping around at renewal.
Why switching often wins in 2026:
- Competing lenders are actively bidding for renewal business from proven, income-verified borrowers
- Rate gaps of 0.25%–0.60% between a bank’s renewal letter and the broker market are common
- On a $600,000 mortgage, moving from a 5.25% posted rate to a 4.60% discounted rate saves roughly $3,900 a year — about $19,500 over a five-year term
The general rule of thumb: if a new lender can beat your current offer by 0.15%–0.30% or more on a mortgage over $300,000, switching usually pays for itself within the first year.
Steps to switch (condensed):
- Confirm your exact maturity date and mark 120 days prior on your calendar
- Get a rate hold from a broker or competing lender
- Compare that quote in writing against your current lender’s renewal offer
- Give your current lender a chance to match (many will, once they know you’re shopping)
- If they won’t match, complete the new lender’s application and let their legal team handle the transfer
Renew vs. Refinance vs. Switch: Side-by-Side
| Factor | Renew | Refinance | Switch |
|---|---|---|---|
| Changes loan amount | No | Yes, up to 80% LTV | No |
| Stress test | Usually not required | Required | Usually not required (post-Nov. 2024 rule) |
| Prepayment penalty risk | None | Yes, if mid-term | None |
| Typical closing time | Same day | 2–6 weeks | 10–15 business days |
| Typical cost | ~$0 | ~$1,000–$3,500+ | Often $0, lender-covered |
| Rate competitiveness | Depends on lender's offer | Market rate, new terms | Usually most competitive |
| Best suited for | Simplicity, competitive existing rate | New funds, debt consolidation, longer amortization | Meaningfully better rate available elsewhere |
Real Payment Scenarios: What Renewal Actually Costs in 2026
These scenarios illustrate the “renewal shock” many 2020–2021 borrowers are experiencing as they roll from sub-2.5% rates into 2026’s 4%–5% market.
| Scenario | Original Rate (2020–21) | Original Monthly Payment | 2026 Renewal Rate | New Monthly Payment | Approx. Increase |
|---|---|---|---|---|---|
| A — $500,000 balance, 22 yrs remaining | 1.89% | ~$2,180 | 4.59% | ~$2,860 | +$680/mo |
| B — $550,000 balance, 20 yrs remaining | 2.09% | ~$2,400 | 4.59% | ~$2,980 | +$580/mo |
| C — $750,000 balance, 23 yrs remaining | 1.59% | ~$3,165 | 4.39% | ~$3,995 | +$830/mo |
Figures are illustrative estimates for a standard fixed-rate mortgage and will vary with your actual balance, amortization, and lender pricing. Use a mortgage renewal calculator with your real numbers before deciding.
If a jump like this would strain your budget, that’s the moment to start shopping — not after you’ve missed a payment. Falling several months behind is the trigger point that can eventually lead into Ontario’s power of sale process, covered below.
Your 120-Day Renewal Timeline
| Time Before Maturity | What to Do |
|---|---|
| 120 days | Lock a rate hold with a broker or new lender; gather income documents (NOA/T4, void cheque) |
| 90 days | Compare your bank's renewal letter (if received) against your outside quote |
| 60 days | Decide: renew, negotiate, refinance, or switch; submit application if switching |
| 30 days | Finalize legal/discharge paperwork if switching lenders |
| 0–7 days | Sign final documents; confirm your first new payment date |
What Happens If You Can't Afford Your Renewal? Power of Sale in Ontario
Most renewals are routine. But when a payment jump is severe enough that a homeowner starts missing payments after renewal, Ontario has a specific legal process lenders use to recover their money — and it moves faster than most people expect.
What is power of sale in Ontario? Power of sale is the legal remedy under Ontario’s Mortgages Act that allows a lender (the mortgagee) to sell a defaulting borrower’s property to recover the outstanding debt. Unlike a foreclosure, the lender does not take ownership of the home — they sell it, deduct what they’re owed plus legal costs, and return any surplus to the homeowner.
How the timeline typically works:
- Where the mortgage contract contains a power of sale clause (true of nearly every standard Ontario residential mortgage), the lender must wait at least 15 days after default before issuing a Notice of Sale, and give at least 35 days’ notice to everyone with a registered interest in the property.
- Where no such clause exists, the statutory power under the Act can be used after three months of default and 45 days’ notice.
- During the notice period, the homeowner can generally stop the process by paying the arrears (not necessarily the full balance) plus reasonable costs.
Why this matters for renewal decisions: a mortgage in good standing does not go into power of sale — the process only begins after an actual default, typically missed payments. The real risk isn’t the renewal rate itself; it’s what happens if a homeowner accepts an unaffordable renewal offer without shopping around, then quietly falls behind rather than acting early. Talking to your lender or a broker the moment a renewal looks unaffordable — well before any missed payment — is the single most effective way to avoid ever entering Ontario’s power of sale process.
If you’re already dealing with a Notice of Sale or missed payments, see our detailed guide on how power of sale works in Ontario and how to stop a power of sale for the specific steps and deadlines that apply to your situation.
Frequently Asked Questions
Do I have to accept my lender's renewal offer?
No. You are never obligated to sign your current lender’s renewal letter. You can shop with a broker, negotiate with your existing lender, or switch to a new one entirely — the mortgage doesn’t disappear if you let the renewal letter sit for a few weeks, as long as you act before your term actually matures.
Do I need to pass the stress test to renew my mortgage?
If you renew with your existing lender on the same loan amount and amortization, you typically do not need to requalify under OSFI’s stress test. If you refinance, or in some switch scenarios where the amount or amortization changes, you generally must qualify at the greater of your contract rate plus 2% or 5.25%.
Is switching lenders at renewal free?
Often close to it. Since the November 2024 rule change removed the stress test for straight switches, many new lenders will cover legal and discharge fees to win your business, though this varies by lender and mortgage type.
What's the difference between power of sale and foreclosure in Ontario?
In a power of sale, the lender sells the property to recover the debt but never takes ownership, and any surplus goes to the homeowner. In a foreclosure, the lender asks a court for title to the property outright. Power of sale is far more common in Ontario because it’s faster and cheaper for lenders.
How much notice do I get before a power of sale in Ontario?
Typically at least 35 days’ notice after a minimum 15-day default period, if your mortgage contains a power of sale clause (most do). If it doesn’t, the statutory process requires three months of default and 45 days’ notice.
When should I start shopping for my mortgage renewal?
About 120 days before your maturity date. That’s the window most lenders use to hold a competitive rate, and it gives you enough time to compare multiple quotes before your term actually ends.
Sources
- Bank of Canada — Policy interest rate announcements
- Government of Ontario — Mortgages Act, R.S.O. 1990, c. M.40
- Financial Consumer Agency of Canada — Mortgage renewals
- Office of the Superintendent of Financial Institutions — B-20 Residential Mortgage Underwriting guideline
About the Author
Faizal Garasia is a licensed mortgage broker (FSRA Lic. #10557) with over 15+ of experience arranging private, alternative, and traditional mortgage financing across Ontario.He specializes in helping homeowners in arrears, self-employed borrowers, and clients facing power of sale compare their financing options side by side.