Switch or Stay at Renewal: The Real Cost of Signing Your Bank's Offer

Renewal watch, September 26, 2026. About 1.15 million Canadian mortgages come up for renewal in 2026, and most of those borrowers will get a letter with a single rate printed on it. On a $450,000 balance with 20 years of amortization left, the difference between signing that letter at an illustrative 4.79% and choosing to switch lenders at renewal at a market 4.04% is $177.83 a month and $15,779 of interest over a five-year term. The paperwork to move usually costs under $700.

Below: what that letter is really telling you, what a switch involves and costs, and the files where staying put wins.

Your renewal letter is an opening position

A mortgage renewal offer is a retention document, produced by a department that knows how many borrowers sign the first number shown and priced accordingly: usually above what the same lender will approve if you push back, and almost always above what the market quotes for the same borrower profile.

Two things follow. The rate on the letter is negotiable — renewal rate negotiation is routine, not a favour, and the lender has a retention desk staffed for that call. And you cannot judge the negotiated number without a competing quote to measure it against.

The market has also moved. Fixed rates have risen roughly 0.50% after the recent surge in Government of Canada bond yields, with the five-year yield near 3.6% — the mechanics are in our rate alert on rising fixed mortgage rates. So your offer may reflect a genuinely more expensive market. That does not make it competitive. Borrowers rolling off 2020 and 2021 terms priced at 2.0% to 2.99% are renewing two to three percentage points higher no matter who they sign with, which is exactly why the spread between lenders is worth chasing.

What it takes to switch lenders at renewal

A switch is not a formality. To transfer your mortgage to another lender you submit a full application and are underwritten as a new borrower: income verified, credit pulled, debt ratios recalculated, property supported. Expect to produce the following.

• Two recent pay stubs and an employment letter — or two years of T1 generals plus business financials if self-employed.
• Your two most recent T4s or notices of assessment.
• A mortgage statement showing balance, remaining amortization and maturity date.
• The latest property tax bill, plus condo fees if they apply.
• A void cheque for the new payment.

Most insured switches and many conventional ones clear on an automated valuation; where the system cannot value the property — rural, acreage, an unusual build — a full appraisal is ordered. Then the legal work: the old charge is discharged and the new lender's registered, handled by a title company or solicitor, not by you. A clean switch runs two to four weeks to funding.

Straight switch or refinance: the fork that sets your bill

This is the distinction that decides who pays for the move.

A straight switch — lenders also call it a transfer — moves the same balance, on the same or a shorter remaining amortization, with no new money. Because the new lender is acquiring a performing mortgage, nearly all of them run a switch program absorbing the cost: legal and title work, the appraisal where required, and registration. If your mortgage is insured, the original insurance generally travels with it, so there is no new premium.

A refinance is a different animal. You are taking new money, extending the amortization past what is left, or both. That makes it a new loan: capped at 80% of the property's value, ineligible for mortgage insurance, and qualified in full. You pay your own legal and appraisal costs, so the mortgage switch costs below understate what you will spend. If your plan involves consolidating debt or pulling equity, you are refinancing, not switching.

One cost lands on you either way: the discharge fee from the outgoing lender, the administrative charge to release its registered charge. It runs a few hundred dollars and varies by lender and province. The illustration below uses $350, plus $350 for an appraisal in case one is required — $700 worst case on a straight switch.

What the gap is actually worth

Assume a $450,000 balance with 20 years of amortization left. The 4.79% renewal offer is an illustrative assumption, not market data — it stands in for a typical unshopped bank offer, and your letter may say something different. The 4.04% and 4.29% figures are current market rates: 4.04% is the best five-year fixed on insured files, 4.29% the quoted three-year fixed. Payments use the Canadian semi-annual compounding convention.

Scenario	Rate	Monthly payment	Monthly saving	Interest paid over 5 years	Interest saved	Net saving after $700 of switch costs
Bank renewal offer (illustrative)	4.79%	$2,906.26	—	$98,188	—	—
Market three-year fixed	4.29%	$2,787.07	$119.19	$87,655	$10,533	$9,833
Market five-year fixed, insured	4.04%	$2,728.43	$177.83	$82,408	$15,779	$15,079

Read the last column first. Even after a $350 discharge fee and a $350 appraisal, 75 basis points on this balance is worth $15,079 over one term. At 50 basis points it is $9,833. The $700 is recovered in under four months of payment savings at 4.04%, six at 4.29%.

The table also understates one thing. A lower rate sends more of each payment to principal, so after 60 payments the 4.04% mortgage carries a balance $5,110 lower than the 4.79% one. Counting that, the five-year benefit is $20,889 before costs — which is why signing the letter is the most expensive piece of paperwork most households will skip.

When it makes sense to stay with your bank

Switching is not automatically correct, and a broker who says otherwise is not reading your file. Four cases where the stay-with-your-bank mortgage decision is the right one.

The balance is small and the amortization is short. The saving scales with both. Take $95,000 with seven years left: moving from 4.79% to 4.29% saves $21.68 a month and $1,646 of interest over five years — $946 after $700 of costs. Real money, but thin compensation for a full application, a document package and a four-week file. Phone your lender, get the rate improved, keep your weekend.

You would struggle to requalify. This is the decisive one. Staying with your existing lender at renewal does not require requalification; moving does, and a switch is tested against the stress test. If your income has dropped, your credit has slipped, or your other debt has grown, the new application may simply not approve — our guide to the mortgage stress test in 2026 covers when the test applies. Be blunt with yourself here: if you cannot requalify elsewhere, your bank's offer is your leverage-free reality, and the move is to negotiate rather than to switch lenders at renewal. Ask for the best retention rate, name the competing rates you have seen, and ask again a week later. That is the whole playbook when switching is off the table.

Your mortgage sits behind a collateral charge. Some lenders register a charge for more than the mortgage amount, so they can lend you more later without new registration. The cost shows up when you leave: the charge must be discharged and re-registered, some lenders will not accept a straight assignment of it, and the switch can be pushed into refinance territory with legal costs you pay yourself. Often still worth doing on a large balance — just price it before you commit.

You are mid-life-event. A job change inside probation, parental leave, a separation, a self-employment year that looks bad on paper. Underwriting reads documents, not context. Renew short with your existing lender and shop the whole market at the next maturity.

Timing: start 90 to 120 days out

Switching rarely fails on rate. It fails on timing. A lender can hold a rate for a defined window, so starting three to four months out gives you a held rate while you compare, room for an appraisal if one is needed, and time for the legal work to complete before your term ends. Leave it to the last three weeks and you have no leverage, no hold, and a real chance of rolling onto your lender's open rate or an automatic renewal. For the rules on the early-renewal window itself, see how early you can renew your mortgage in Canada.

Common questions

Can I switch lenders at renewal without penalty?

Yes. At maturity there is no prepayment penalty, because the term has ended and the contract is over — that is what makes renewal the one moment your mortgage is genuinely portable. You will still normally pay the outgoing lender's discharge fee, a few hundred dollars depending on lender and province. Move before maturity and you are breaking the term, which triggers a prepayment charge instead.

Does switching lenders require requalifying?

Yes. A switch is a new application at a new lender, so income, credit and debt ratios are reassessed and the file is qualified at the stress-tested rate. Renewing with your existing lender does not trigger that. This asymmetry is why some borrowers are stuck with the offer they receive, and it is the first thing to establish before you spend time shopping.

How much can I save by switching at renewal?

It depends on the balance, the remaining amortization and the rate gap. On the $450,000 example above, 75 basis points is worth $177.83 a month and $15,079 over five years net of costs. On a $95,000 balance with seven years left, a 50 basis point gap is worth about $946 net. Run your own numbers — the rate difference alone does not tell you whether the move is worth the work.

What to do next

Pull your maturity date and count back 120 days. If that date has passed, start now. Get your balance and remaining amortization off your mortgage statement, then collect two competing quotes before you reply to your lender — not after. Call the retention desk with those numbers in hand and ask for their best rate in writing. If they match the market, sign and keep the simplicity. If not, you know exactly what the gap is worth.

RateShop.ca is an independent mortgage shopping and comparison marketplace, so you can compare offers from A lenders, B lenders and private options in one place instead of taking one lender's word for what is available. Bring your renewal letter, your balance and your maturity date, and find out whether the number on that letter deserves your signature — or whether you should switch lenders at renewal and keep the difference.