Your renewal letter is not an offer — it’s a starting bid.
Lenders count on renewal inertia. Most Canadians sign back within 2 weeks without shopping — and pay for that loyalty with a higher rate for five more years.
The number most borrowers never calculate
Breaking a mortgage early costs money — the penalty. But a penalty is a one-time cost. A higher rate compounds over a 5-year term. Depending on the rate gap and your balance, breaking now can save $8,000–$20,000+ even after the penalty. The math is worth running.
Renewal or refinance — the timing question
- Renewal within 120 days (start shopping now — free rate hold)
- Mid-term and rates have dropped significantly
- Need to access equity (renovation, debt consolidation, investment)
- Life has changed — income, family, employment
- Switching lenders for better product features (prepayment, portability)
- Want to restructure amortization to reduce monthly payments
What lenders evaluate
- Maximum LTV: 80% of property value for conventional refinance
- Re-stress-tested: your income is re-qualified at current rules
- Credit: recent history matters; one missed payment changes options
- Property appraisal: usually required for refinances (add $300–$500 cost)
- Penalty calculation: ask your lender; IRD vs. 3-months interest can vary wildly
- Insured: you cannot increase loan amount on an insured refinance
Tools that can make the math work
120-Day Rate Hold
Most lenders allow a rate hold starting 120 days before renewal. Lock in today’s rate while keeping the option to take a lower rate if available at closing.
Blend & Extend
Stay with your lender, blend the remaining term rate with a new rate, extend the term. Sometimes avoids the penalty entirely — worth modelling against a full break.
Cash-Out Refinance
Pull equity for renovations, consolidate high-interest debt (often 19–24% credit card → 5–6% mortgage), or invest. Requires conventional LTV (80% max).
Amortization Re-Set
Refinancing can restart the amortization clock. For cash-flow-strained households, this materially reduces monthly payments even at a similar rate.
Current Mortgage Statement
Most recent statement showing outstanding balance, maturity date, and original terms. Required for penalty and switch calculations.
Property Value Estimate
Recent MPAC assessment or broker opinion of value. Full appraisal ordered after application (lender cost or yours depending on scenario).
Current Income Docs
T4s (2 years), recent pay stubs, Notice of Assessment. Refinances are fully re-underwritten like a new purchase.
Credit Summary
Lender will pull bureau. Know your score and resolve any errors beforehand — especially if this is a debt consolidation refinance.
Debt Schedule
All current balances — credit cards, lines of credit, car loans. Needed for TDS calculation and to build your consolidation case.
Title Confirmation
Lawyer confirms no liens, judgments, or title encumbrances. Your solicitor handles this at closing.
A renewal review costs nothing. A missed rate often costs thousands.
I calculate break-even on any penalty vs. the rate savings so you know the actual net benefit.
Your renewal offer becomes negotiating leverage when I bring competing lender rates to the table.
Start 120 days out. We lock a rate, monitor, and adjust strategy right up to closing day.
Refinance isn’t just a rate exercise. We discuss how your equity can work harder for your next financial goal.
Mortgage Refinance vs. Renewal: What’s the Difference?
The short version — and you can always call for the full picture.
Prefer it explained in plain English?
In a short, no-obligation call I’ll walk you through exactly how this works for your situation — no jargon, no pressure.
Prefer to talk? Call or text 289-834-9099 — free, no pressure.
Ready to talk numbers?
No obligation. Just a straight conversation about your mortgage options.