Renewal strategy, refinance math, and cutting interest cost at the term change.
Your lender's blend and extend offer is not a discount — it prices the added months at its current rate. On a $500,000 mortgage at 3.79% with 48 months left, the blend lands at 3.90%, and it only pays if the renewal rate four years out beats about 4.39%. Here is the math, the penalty you are actually avoiding, and what to ask before you sign.
A mortgage prepayment penalty on a $485,000 balance at 5.49% is $6,657 under the three months' interest method and $13,095 under the discount-adjusted posted-rate IRD. With the best five-year fixed at 4.34%, here is which borrowers clear the penalty by refinancing and which do not.
At a 4.04% contract rate you qualify at roughly 6.04%, which cuts a $120,000 household's maximum mortgage from about $643,700 to $529,400. Here is how the qualifying rate and debt service ratios work — and the one renewal exception most borrowers miss.
Rolling $59,000 of credit card, car and line-of-credit debt into a $380,000 mortgage cuts the monthly payment by $1,292.31 — and costs about $11,879 more in interest over 20 years. Here is the honest math both ways, plus the fix.
On a $450,000 renewal with 20 years left, the gap between an illustrative 4.79% bank offer and a market 4.04% is $177.83 a month and $15,079 over five years after switch costs. Here is what moving involves, and when staying is the smarter call.
A mortgage rate hold is free: it caps your rate for 90 to 120 days at most lenders, and most will still give you the lower rate if the market drops. Taken now, a 120-day hold covers both the October 28 and December 9 Bank of Canada decisions.
CMHC puts about 1.15 million Canadian mortgages up for renewal in 2026, on top of 1.5 million already renewed. A $600,000 mortgage from 2021 at 1.99% goes from $2,537.81 a month to $3,046.84 at today's best insured fixed rate.
Most Canadian lenders allow a penalty-free renewal about 120 days before maturity, and some allow more. See what the major banks publish, how renewing early differs from breaking early, the start-date trap that can cost thousands, and how rising bond yields affect timing in 2026.
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