Learn / Renewal letter

What that renewal letter actually is

Your mortgage term ends. The lender wants you for another term. So they send a renewal statement with a rate, a payment, a term length, and often a “sign here” path.

If your mortgage is with a federally regulated lender (most big banks), Canada’s Financial Consumer Agency says they must send that statement at least 21 days before your term ends. They also have to tell you 21 days out if they will not renew you. That is the floor, not a shopping timeline.

The rate on the letter is often a starting number. Plenty of people get a better renewal rate from the same lender once they show a real competing quote. If you do nothing and the statement says the mortgage renews automatically, you can land on that first offer. Easy for them. Not always great for you.

When signing is fine

Signing can be the right move when:

• You already compared the market (or had a broker do it) and the bank’s rate is competitive after negotiation.
• You want zero friction: same lender, same setup, no lawyer switch file.
• You like the features (prepayments, portability, payment flexibility) and the rate gap is not worth the hassle.
• Your file is messy for a switch right now (income docs, credit, condo issues) and staying avoids a new underwrite you may not win.

Fine does not mean “sign the first PDF the day it hits your inbox.” Fine means you looked, you asked for their best number, and you chose stay on purpose.

When you should shop

Shop when the letter rate looks soft, when your payment jumps hard, or when you simply have not checked what else is available. You do not have to renew with the same lender. FCAC’s own consumer page says start shopping a few months before the term ends, and do not wait for the letter.

A practical Ontario timing map:

• About 4 to 6 months out: gather balance, maturity date, current rate, and whether the mortgage is a standard charge or a collateral charge. Ask the lender or your lawyer if you are unsure. Collateral charges can make a switch more paperwork and more legal cost.
• About 3 months out: get competing quotes. Take the best written number back to your current lender’s renewal or retention team and ask them to match or beat it.
• Before maturity: decide stay or switch early enough that a move can fund on time. Last-week panic is how people auto-renew into a rate they never compared.

Many lenders will hold a renewal rate for a stretch before maturity (often in the ballpark of a few months). Confirm the hold window in writing for your lender. Rules differ.

Stay vs switch vs refinance (and the stress test)

Three different moves. Do not mix them up.

Stay (simple renewal with the same lender). Usually no full OSFI minimum qualifying rate stress test. You are renewing what you already have. Still read the terms. Still negotiate the rate.

Straight switch (move the same loan to another federally regulated lender). Since November 21, 2024, OSFI no longer expects federally regulated lenders to apply the prescribed minimum qualifying rate (the familiar “stress test”) to an uninsured straight switch at renewal. That means: existing stand-alone uninsured mortgage, FRFI to FRFI, and no increase in loan amount or remaining amortization. The new lender still underwrites you under Guideline B-20 (income, credit, debt service). The prescribed MQR hurdle that used to trap a lot of people is gone for that narrow case. Insured straight switches already sat outside that particular trap in practice for many files. Confirm your insurance status on your statement.

Refinance (take cash out, raise the balance, stretch amortization, or otherwise change the loan). Treat this as a new loan. The full stress test typically applies: qualify at the higher of contract rate + 2% or the current OSFI floor (5.25% as of OSFI’s early-2026 review, with no change announced then). If you need money out or a longer amortization, plan for that test.

Also: provincial credit unions are not OSFI FRFIs. Their rules can differ. A switch into or out of a credit union is not automatically the same as an OSFI straight-switch exemption. Ask before you assume.

Costs people forget

A lower rate only wins if it beats the friction. On a switch, ask about legal fees, discharge fees, appraisal, and whether the new lender will cover any of that to win the file. Standard-charge mortgages are usually cleaner to move. Collateral-charge mortgages can mean a full discharge and re-registration, which costs more time and legal work.

If you break a term early to refinance, penalties can wipe the savings. At true maturity, switching is often the cleanest window because you are not still inside a fixed term penalty the same way. Your contract still rules. Read it.

A blunt decision tree

1. Open the letter. Note rate, payment, term, and any auto-renew language.
2. Get at least one real market quote (broker or another lender).
3. Ask your current lender to beat it, in writing.
4. If stay wins on rate and features, sign the better offer, not the first draft.
5. If switch wins after costs, start the file early enough to fund on maturity.
6. If you need cash out or a longer amortization, run the refinance math and the stress test separately. Do not pretend it is a simple renewal.

What I will do on a call

We look at your letter beside real options: stay, switch, or refinance. We flag charge type, insurance status, penalties, and whether a straight-switch path is even available for your lender mix. Then you pick with eyes open.

Book a call

OAC. Rates and payments shown or discussed are On Approved Credit. Approvals, rates, terms, and lender policies change. This page is general Ontario consumer information, not a commitment to lend and not legal advice. Confirm details on your file before you sign anything.