Why Banks Count on Auto-Renewal
Most Canadian homeowners renew their mortgage with their existing lender without shopping. It's convenient — they just send you a renewal letter, you sign it, and carry on. But this is exactly what banks are banking on (pun intended). They know that most people won't shop, so they can offer you a rate that's not particularly competitive. It's behavioural economics: inertia works in their favour.
The numbers bear this out. Borrowers who shop around at renewal typically save 0.30% to 0.60% compared to what their current bank offers. On a $500,000 mortgage, that's $1,500 to $3,000 per year — or $7,500 to $15,000 over a five-year renewal term. That's real money.
At renewal, you have genuine negotiating power. You've been a customer for five years, you've made every payment on time, and you have equity in the home. Your lender knows that if they don't offer you something competitive, you'll walk. This is the moment to leverage that power.
The Timing: 120 Days Before Maturity
Your lender will send you a renewal letter about four months (120 days) before your term matures. This is your signal to start shopping. Don't wait until day 119 — lenders can tell if you're shopping at the last minute, and they're less motivated to negotiate.
Start shopping at the 120-day mark. Call your current lender and ask them: "What's your best rate for a five-year renewal?" Then call a broker and say the same thing. Get multiple competing offers in front of you.
The key word is "competing." If your current lender can see that you have a better offer from another lender, they will almost always match it or beat it. Banks hate losing customers at renewal, especially when they could have kept them.
How to Negotiate
Step 1: Gather quotes. You need at least two — ideally one from your current lender and one from an alternative. A mortgage broker can gather five or six in an afternoon.
Step 2: Ask your current lender to match or beat the best alternative offer. Be direct: "I have an offer for 4.25%. Can you do better than that?" Most times, they can. If they won't, you know it's time to move.
Step 3: Consider switching. Switching lenders at renewal is more straightforward than many people think. The new lender pays off your old mortgage and registers their new one. You will need a real estate lawyer to handle the discharge and registration, but many lenders cover these legal costs (typically $500–$1,000) as part of the switch incentive.
Important update: As of November 2024, OSFI no longer requires the mortgage stress test for "straight switches" — when you switch lenders at renewal without increasing your loan amount or extending your amortization. This makes switching significantly easier for many borrowers.
| Scenario | Your Current Offer | Market Rate | Action |
|---|---|---|---|
| Current lender offers 4.50% | 4.50% | 4.35% (best available) | Ask current lender to match 4.35% |
| They can't match | 4.50% | 4.35% | Switch to new lender — save 0.15% |
| They match | 4.35% | 4.35% | Renew with current lender (convenience) |
What to Look For Beyond Rate
Rate is the headline, but not the only factor. Check whether the new lender allows prepayment without penalty (most do, but ask). Check the length of the rate hold — sometimes a lender will lock in a rate for 120 days, sometimes only 30. Check if they offer flexibility for breaks, variable options, or re-advanceable mortgages.
Also check whether you're renewing into the same product. If you're currently in a "prime minus" variable, confirm that the new lender's variable product offers a similar discount. If you're switching from fixed to variable (or vice versa), that's a bigger decision and warrants running the break-even math.
Using a Broker at Renewal
This is where a mortgage broker adds real value. They can shop six or seven lenders in one phone call, present you with all the options, and help you negotiate with your current lender. They work on commission, not salary, so their incentive is to get you the best deal in the fastest time. And because they have relationships with all the major lenders, they often know what a lender is willing to offer before you even call them.
The Conversation You Should Have
Call your lender at the 120-day mark and say: "My mortgage renews on [date]. I'd like to lock in the best rate you can offer for a five-year fixed (or variable, or whatever your preference is). I'm also shopping with other lenders, so I want to understand what you can do to keep my business."
That sentence does three things: it signals you're serious, it tells them you're shopping, and it gives them a chance to compete for you before you've already made your decision.
For the full strategic picture, read our renewal and refinancing pillar guide — it covers the break-now-vs-wait math. Our list of questions your bank hopes you never ask is the exact script to use on that 120-day call. On the product side, our breakdown of fixed vs variable in 2026 walks through which term to lock into, and if you're planning to shop lenders at renewal, the Ontario pre-approval guide shows what a competitive file looks like.
The Key Takeaway
Don't auto-renew. Shop starting 120 days before your maturity, gather competing offers, and negotiate with your current lender. Most borrowers who do this save $1,500 to $3,000 per year. It takes a few hours and can be worth tens of thousands of dollars.
Ready to Renew Smart?
Pathway Mortgage helps Ontario borrowers shop renewals and negotiate the best possible rates. If you have a renewal coming up in the next 6 months, reach out now.
Talk to Pathway Mortgage