What Is a Mortgage Renewal? A Complete Canadian Guide
Updated March 2026 · 10-minute read
Every Canadian homeowner with a mortgage will face a renewal — often more than once. Yet the vast majority of Canadians sign their renewal paperwork without truly understanding what they're agreeing to, or what their options are. This guide explains everything you need to know: what a renewal actually is, how the process works, what your lender is legally required to tell you, and what your rights are under Canadian law.
Key Takeaways
- • A mortgage renewal is a renegotiation of your rate and terms at the end of each term — typically every 1 to 5 years — not an automatic continuation.
- • Over 70% of Canadians simply sign their lender's renewal offer without shopping around, which almost always means paying a higher rate than necessary.
- • FCAC rules require lenders to send a renewal statement at least 21 days before maturity; the Canadian Mortgage Charter encourages contact 4-6 months in advance.
- • Even a 0.25% rate reduction on a $500,000 mortgage saves approximately $1,250/year or $6,250 over a 5-year term.
- • If you do nothing at renewal, your lender will auto-convert you to a posted-rate open mortgage — potentially 1-2% higher, costing $5,000-$10,000/year extra on a $500K balance.
The Most Important Distinction: Term vs. Amortization
The single most misunderstood concept in Canadian mortgages is the difference between your mortgage term and your amortization period. These are two completely different things, and confusing them leads to costly mistakes.
Your amortization period is the total length of time it would take you to pay off your entire mortgage if you made every scheduled payment without change. Most Canadian mortgages are amortized over 25 years (the maximum for insured mortgages) or up to 30 years for conventional (uninsured) mortgages as of late 2024 for first-time buyers and new builds. This is the actual life of your debt.
Your mortgage term is the length of your current agreement with your lender — the period during which your interest rate, payment schedule, and mortgage conditions are locked in. The most popular term in Canada is 5 years, but terms range from 6 months to 10 years. At the end of each term, if you still have a remaining balance (which virtually everyone does, especially in the early years), your mortgage must be renewed or paid off in full.
Concrete Example
You purchase a home with a 25-year amortization and a 5-year fixed term. After 5 years, you've paid down some principal — but you still owe roughly 89% of your original loan (depending on your rate and payments). At that point, your 5-year term ends and your mortgage must be renewed for another term. The amortization period continues; you now have roughly 20 years remaining. This cycle repeats approximately 4–5 times over the life of a typical Canadian mortgage.
What Is a Mortgage Renewal?
A mortgage renewal is the process of renegotiating the terms of your mortgage at the end of your current term. The key word is renegotiating. This is not an automatic continuation — it is a financial decision that can significantly affect your household budget for the next several years.
When your term expires, you have three primary options:
- Accept your current lender's renewal offer — sign the paperwork they send you and continue with the same lender under new terms (usually a new interest rate and term length).
- Negotiate with your current lender — use competing offers to push your current lender to offer a better rate or improved conditions.
- Switch to a new lender — transfer your mortgage to a different financial institution that offers better rates, lower fees, or more favourable terms. Since 2024, this can typically be done without a stress test on a straight transfer.
The vast majority of Canadians — studies suggest over 70% — simply accept whatever renewal offer arrives in the mail from their current lender. This is almost always a financial mistake. Lenders deliberately send renewal offers at posted rates (their highest published rates), knowing that many customers won't push back.
The Step-by-Step Renewal Process
Lender sends your renewal statement (21–120 days before maturity)
Under FCAC rules, your lender must send a renewal statement at least 21 days before your maturity date. Increasingly, proactive lenders reach out 4–6 months in advance as encouraged by the Canadian Mortgage Charter.
You review competing offers (ideally 120 days before maturity)
Use a mortgage broker or shop directly with multiple lenders to get competing rate quotes. Most lenders allow you to lock in a rate up to 120 days in advance, protecting you if rates rise. For a step-by-step timeline, see our mortgage renewal checklist.
You negotiate (or let your broker negotiate on your behalf)
Armed with competing offers, you or your broker go back to your current lender and ask for a better rate. Many lenders will match or beat competing offers to retain your business.
You choose a term and sign
Once you've selected the best offer, you sign the renewal agreement (or new mortgage commitment if switching). This can often be done electronically.
New term begins on your maturity date
Your new rate and conditions take effect. Your remaining amortization continues from where it left off.
When Do Mortgages Renew?
Mortgages renew at the end of each term. The most common terms in Canada are:
| Term Length | Type | Popularity | Notes |
|---|---|---|---|
| 1-Year Fixed | Short | Moderate | Good when rates expected to fall |
| 2-Year Fixed | Short | Lower | Flexibility with moderate commitment |
| 3-Year Fixed | Medium | Moderate | Popular middle ground |
| 4-Year Fixed | Medium | Low | Rarely best value |
| 5-Year Fixed | Long | Most Popular | Benchmark for Canadian mortgages |
| 5-Year Variable | Long | High | Fluctuates with Bank of Canada rate |
| 10-Year Fixed | Very Long | Low | Rare; only some lenders offer |
What Happens If You Do Nothing?
If you fail to act on your renewal — whether because you didn't realize the deadline was approaching or you simply forgot — your lender will not let your mortgage go into default. Instead, most lenders will automatically convert your mortgage to a short-term (often 6-month) open mortgage at their posted rate.
Posted rates are the highest rates a lender publishes — significantly higher than the discounted rates available to borrowers who shop around or negotiate. An auto-renewed mortgage at posted rate could cost you 1–2% more in interest annually until you address it. On a $500,000 mortgage, that's $5,000–$10,000 per year in unnecessary interest.
The silver lining: open mortgages can be broken without penalty, meaning you can switch or renegotiate at any time without paying a prepayment charge. But you should never let it get to this point.
What's in Your Renewal Statement?
Your lender is required to provide a renewal statement that includes specific information. Understanding each component helps you make an informed decision.
- Outstanding principal balance: The amount you still owe on your mortgage as of the renewal date.
- Proposed interest rate: The rate your lender is offering for the new term. This is typically their posted rate — not their best rate.
- Proposed term: The term length they're suggesting. Often 5 years by default.
- Proposed payment amount: Your new regular payment (monthly, bi-weekly, etc.) at the proposed rate.
- Maturity date: The date your current term expires and the new term would begin.
- Prepayment privileges: The terms for making lump-sum payments or increasing regular payments during the new term.
- Portability provisions: Whether the mortgage can be moved to a new property if you move during the term.
Your Legal Rights: FCAC Rules and the Canadian Mortgage Charter
FCAC Rules: The 21-Day Requirement
The Financial Consumer Agency of Canada (FCAC) mandates that federally regulated lenders (the major banks and many other institutions) must send you a renewal statement at least 21 days before your mortgage maturity date. This is the legal minimum. If your lender fails to send this statement on time, it does not automatically void your mortgage — your mortgage still exists — but it is a compliance failure by your lender.
In practice, most proactive lenders now send renewal packages significantly earlier than 21 days, because they know that borrowers who receive early notices are more likely to renew with the same lender (rather than shopping around at the last minute and finding a better deal elsewhere).
Canadian Mortgage Charter: 4–6 Month Early Contact
Introduced as part of Canada's Fall Economic Statement in 2023 and expanded in 2024, the Canadian Mortgage Charter sets out expectations for how lenders should treat borrowers — particularly at renewal. One key expectation is that lenders proactively contact borrowers 4–6 months before their renewal date to discuss their options.
This is especially important for the large wave of Canadian mortgage renewals happening in 2025 and 2026, as millions of mortgages taken out during the record-low rate environment of 2020–2021 come up for renewal at today's higher rates.
The Charter also encourages lenders to work with borrowers who may be experiencing financial difficulty at renewal — offering options like extending amortization, making temporary interest-only payments, or other tailored solutions. If you're facing financial hardship at renewal, read our guide on renewals in financial difficulty.
Renewal vs. Refinancing vs. Porting: Know the Difference
These three terms are often confused, and each has significantly different implications:
Renewal
Renewing your mortgage means starting a new term at the end of your existing one. Your loan amount stays the same (the outstanding principal balance), and you're simply choosing new terms — rate, term length, payment frequency. No new money is advanced. Renewals with the same lender typically don't require a new credit check or stress test, though switching lenders has its own rules.
Refinancing
Refinancing means replacing your existing mortgage with a new one — potentially for a different amount, different amortization, or to access your home's equity. If you want to borrow more money (say, to renovate or consolidate debt), you must refinance. Refinancing always requires a new stress test, a new appraisal, and new legal work. It's more costly and complex than a simple renewal, but it offers more flexibility.
Porting
Porting means transferring your existing mortgage (rate, terms, and remaining balance) from one property to another when you move. Not all mortgages are portable, and porting typically has a time limit (often 30–90 days between selling and buying). Porting can be valuable when you have a low rate that would be expensive to break, but the logistics can be complex — particularly if your new home costs significantly more than your old one.
For a deep dive on the renewal vs. refinancing decision, read our complete comparison guide.
The Renewal Rate Opportunity
Your mortgage renewal is arguably the single most important financial event you'll encounter as a homeowner — more impactful than the rate you negotiated when you first bought your home, because you now have leverage. You've proven your creditworthiness by making payments for years. You have a track record. New lenders want your business.
The difference between accepting your lender's renewal offer and shopping around can be substantial. Even a 0.25% rate reduction on a $500,000 mortgage saves approximately $1,250 per year in interest — or $6,250 over a 5-year term. On a $700,000 mortgage (common in Ontario and British Columbia), that same 0.25% difference saves $8,750 over five years.
Working with a mortgage broker at renewal costs you nothing (brokers are paid by lenders) and opens up access to rates from 30+ lenders. Read more about how a mortgage broker can help at renewal.
Key Terms Explained
- Term
- The length of your current mortgage contract — typically 1 to 5 years in Canada. At the end of the term, your mortgage must be renewed or paid off.
- Amortization
- The total time it would take to pay off your entire mortgage with regular payments. Usually 25 years (insured) or up to 30 years (conventional).
- Maturity Date
- The specific date your current mortgage term ends. This is your renewal date.
- Renewal Statement
- The document your lender sends before your maturity date outlining their proposed new terms. Must arrive at least 21 days before maturity under FCAC rules.
- Posted Rate
- The highest published rate for a given mortgage product. What lenders advertise and often offer in renewal statements before negotiation. Always higher than the discounted rate.
- Discounted Rate
- The actual rate you receive after negotiating or working through a broker. Typically 0.5–1.5% below the posted rate.
- Principal
- The actual amount you borrowed (or still owe). Interest is calculated on the principal balance. Each payment reduces the principal slightly while also covering interest.
For definitions of additional Canadian mortgage terms — including collateral charge, IRD penalty, stress test, and more — visit our complete mortgage renewal glossary.
Related Guides
Switching Lenders at Renewal
How to save $10,000+ by switching — and how the 2024 stress test rules changed everything.
Renewal vs. Refinancing
Side-by-side comparison: when to simply renew and when to refinance instead.
Fixed vs. Variable at Renewal
Which rate type is right for your next term? Risk, penalties, and the current rate environment.
10 Biggest Renewal Mistakes
From auto-renewing without shopping to signing too early — avoid these costly errors.
Mortgage Renewal Checklist
A step-by-step checklist from 12 months before renewal to renewal day itself.
How a Broker Helps at Renewal
Free to use, accesses 30+ lenders. Here's what a broker actually does for you.