Updated March 2026 · 8-minute read
Canada's mortgage renewal season is one of the most financially consequential periods in any homeowner's life — and most people sleepwalk through it. Whether you're renewing for the first time or the fifth, the same costly errors appear repeatedly. Here are the 10 most expensive mistakes Canadian homeowners make at renewal, and exactly what you should do instead.
Auto-Renewing Without Shopping
This is the most common and most expensive mistake. Over 70% of Canadians accept their lender's renewal offer without getting a single competing quote. Your lender's renewal statement almost always contains their posted rate — not their best rate. Posted rates can be 0.50–1.50% higher than what a broker could negotiate.
The cost: On a $600,000 mortgage, a 0.75% rate difference costs approximately $4,500/year or $22,500 over a 5-year term. That's money that stays in your lender's pocket instead of yours.
What to do instead: Start shopping 120 days before your renewal date. Contact a mortgage broker to get competing offers from 30+ lenders. Use that offer to negotiate — or simply switch.
Waiting Until the Last Minute
Waiting until your renewal statement arrives (often only 21 days before maturity) leaves you almost no time to shop, compare, negotiate, or switch lenders. The administrative process of switching lenders alone takes 3–6 weeks. Starting too late means you're either forced to accept your current lender's terms, or you miss your maturity date and end up on an open mortgage at posted rates.
The hidden urgency: Rate holds are typically valid for 120 days. If you start early and rates rise after you lock in your hold, you're protected. If rates fall, most lenders allow you to drop down to the lower rate before funding.
What to do instead: Set a calendar reminder for 120 days before your maturity date. That's your start date for the renewal process, not the finish line.
Only Looking at the Rate
Rate is important — but it's not the only thing that matters. Two mortgages with identical rates can have dramatically different costs if one has a punishing IRD penalty formula and the other has a fair one. A 5-year fixed at 4.60% at a major bank with a large-bank IRD formula may end up costing you more than a 4.65% rate at a monoline with a fair IRD — if you break the mortgage 2 years in.
Other factors to consider: prepayment privileges (can you make extra payments?), portability (can you take the mortgage with you if you move?), and term flexibility.
What to do instead: Ask your broker to explain the full mortgage features — not just the rate. Request the penalty formula and prepayment terms in writing.
Not Knowing Your Mortgage Charge Type
If your current mortgage is registered as a collateral charge (which TD Canada Trust and National Bank do by default, and many others offer), switching lenders at renewal requires a full discharge and re-registration — not a simple assignment. This means higher legal fees, more complexity, and potentially discouraging you from switching even when it's financially beneficial.
Many borrowers discover this only when a broker or lawyer tells them during the switching process — often adding $500–$1,000 in unexpected costs. Knowing in advance lets you plan accordingly.
What to do instead: Check your existing mortgage documents or ask your current lender whether your mortgage is registered as a standard charge or a collateral charge.
Ignoring the Amortization Reset Opportunity
Most Canadians simply renew on the remaining amortization (if you started with 25 years and have 20 left, you continue with 20 years). But renewal is an opportunity to reassess: if cash flow is tight, you may be able to negotiate a modest amortization extension (subject to lender approval and qualifications). If cash flow is healthy, you could shorten your amortization to pay down principal faster.
Shaving 2 years off a remaining 20-year amortization might only add $200–$300/month to your payment, but saves tens of thousands in interest over the life of the mortgage.
What to do instead: Review your amortization timeline and ask your broker what your payment would look like at different amortization lengths. Make an intentional choice rather than accepting the default.
Not Running the Stress Test Math Yourself
Even at renewal, where no stress test is technically required, it's worth running the stress test calculation yourself to understand your financial position. If you're considering refinancing to access equity, the stress test absolutely applies. Knowing in advance whether you'll qualify — and at what amounts — prevents wasted time and disappointment.
Stress test rate = your contract rate + 2%, or 5.25%, whichever is higher. Your total debt service ratio (TDS) must remain under 44% when qualifying at this rate.
What to do instead: Use a mortgage stress test calculator online, or ask your broker to run the numbers before you commit to any refinancing plans.
Signing Too Early With Your Current Lender
Some lenders will send renewal offers 4–6 months before your maturity date (encouraged by the Canadian Mortgage Charter) and ask you to sign early. While this is well-intentioned, signing early without shopping locks you into that lender's offer before you've had a chance to compare alternatives. You can always accept later; you can't always negotiate down once you've committed.
If you receive an early renewal offer from your current lender, treat it as an opening position — not a final offer. Thank them, and then go shopping.
What to do instead: Use the early offer as a benchmark. Get competing quotes from a broker and bring those back to your current lender before signing anything.
Falling for the Cashback Mortgage Trap
A cashback mortgage offers you an upfront cash payment (typically 2–5% of your mortgage) in exchange for a higher interest rate over the term. The math almost never works out in your favour. A $500,000 mortgage with a 3% cashback ($15,000) and a rate 0.80% above market costs approximately $4,000/year more in interest — meaning the cashback is consumed within 4 years while you're still paying the premium rate for the remaining year.
Additionally, cashback mortgages typically require repayment on a prorated basis if you break the mortgage early.
What to do instead: Run the full-term interest cost comparison before accepting any cashback offer. Ask your broker to model the cashback vs. non-cashback scenarios side by side.
Not Improving Your Credit Before Renewal
Your credit score at renewal time directly affects the rate and options available to you — even with your current lender. A credit score of 720+ typically qualifies you for the best available rates. A score under 650 can result in rate surcharges, limited lender options, or in extreme cases, a renewal denial. The time to address credit issues is before renewal, not on your maturity date.
Simple credit improvements include: paying down credit cards below 30% utilization, ensuring no missed payments in the 12 months before renewal, and avoiding opening new credit accounts in the 6 months before your maturity date.
What to do instead: Pull your credit report from Equifax and TransUnion 12 months before renewal. Address any errors or issues immediately.
Skipping the Broker Conversation
Perhaps the most meta mistake: failing to consult a mortgage broker at all. A broker's service is free to you, takes less than an hour of your time, and consistently produces better outcomes than going directly to a single lender. Even if you ultimately decide to stay with your current lender, having the broker's competing offers in hand gives you negotiating leverage that dramatically improves your renewal rate.
There's no downside to speaking with a licensed broker — no cost, no obligation, and significant potential upside. The only reason not to do it is inertia.
What to do instead: Book a free renewal strategy call with a licensed broker at least 120 days before your renewal date.
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