Want to switch lenders at renewal? Here's what you need to know

By: Michelle Bates on June 11, 2025

This article has been updated from a previous version.

Switching mortgage lenders at renewal can be one of the smartest financial moves a homeowner can make—especially if your current lender isn’t offering a competitive rate. It’s also one of the few times you can make a change without paying a prepayment penalty.

By exploring your options, you may be able to secure a lower interest rate, better terms, or even cashback incentives. But before making the switch, it’s important to understand the potential savings, the costs involved, when requalification is required, and how a mortgage broker can help simplify the process.

Switching mortgage lenders can save you money

Perhaps the most common reason homeowners choose to start a mortgage term with a new lender when their contract is up for renewal is to save money long-term. Once you’ve decided on your next term length and whether you prefer a fixed or variable rate, compare current offers from multiple lenders.

This helps you find the most competitive rate for your remaining principal—without triggering a penalty, since you’re not breaking your contract early.

Even a small difference in interest rates can lead to significant savings over time. For instance, lowering your rate by just 0.25% on a $400,000 mortgage could save you thousands in interest over a five-year term.

Other potential savings include:

Lower monthly payments, which can free up cash flow.
Better terms or features, such as increased prepayment privileges or more flexible payment schedules.
Access to promotional offers, like cashback incentives or waived fees, which some lenders use to attract new clients at renewal.

Requalification may still be required in some cases

As of 2024, Canada's banking regulator (OSFI) no longer requires homeowners to pass the mortgage stress test when switching lenders at renewal—as long as the mortgage amount and amortization period remain unchanged.

However, if you plan to increase your mortgage amount (e.g., for renovations or debt consolidation), or extend your amortization period (to reduce monthly payments), then your mortgage is treated as a new application, and you’ll need to requalify under current lending rules, including the stress test.

This means qualifying at either the benchmark rate (currently 5.25%) or your contract rate plus 2%, whichever is higher.

Fees when switching mortgage lenders

While you won’t face a pre-payment penalty, switching lenders can still come with some costs.

These costs could include:

Setup fees (may include discharge, registration, transfer, or assignment fees from your previous lender)
Appraisal fee (to determine your property’s value)
Administration fees

Many lenders are willing to cover some or all of these fees to earn your business, so it’s worth asking upfront if they offer any incentives or rebates.

Working with a mortgage broker is key

A mortgage broker can help you compare offers and navigate the renewal process. They’ll help you decide whether switching is worth it.

Skipping this step could mean missing your best chance to switch lenders without a penalty.

What a broker can do for you:

Access exclusive rates not always available to the public
Help you understand the fine print in renewal offers
Negotiate on your behalf with lenders
Save you time by handling paperwork and communication

Best of all, mortgage brokers are typically paid by the lender—not you—so their services often come at no cost to the borrower.

Once you do your due diligence with a broker’s help, you can feel more confident in your renewal decision—and potentially save thousands over the life of your mortgage.