Why negotiating works
Your lender's cost of keeping you is low and its cost of losing you is high: it has to find and approve a new borrower to replace your loan. That gives you leverage. But the renewal letter is designed to be signed, not negotiated. It arrives with a deadline, a pre-filled form, and often a rate that's higher than what the same lender advertises to new customers.
On a $400,000 balance, a 0.60-point improvement is worth about $11,000 in interest over a five-year term. A quarter point is worth about $4,700. You can test your own numbers in the renewal calculator.
The timeline
| When | What to do |
|---|---|
| 6 months before maturity | Find your maturity date, balance, and remaining amortization. Pull your credit report from Equifax and TransUnion and fix any errors. |
| 4 months before | Get at least two written rate offers: one from a mortgage broker and one directly from another lender. Most lenders will hold a rate for up to 120 days. |
| 3 to 4 months before | Your renewal offer usually arrives around now. Federally regulated banks must send it at least 21 days before maturity. |
| Within a week of the offer | Call your lender's retention or renewals team with your best competing offer. |
| At least 30 days before | Decide. If you're switching, the new lender needs time for paperwork, appraisal and legal work. |
Don't miss the date. If you do nothing, some lenders renew you automatically, sometimes into a short term or an open mortgage at a higher rate. Federally regulated lenders must tell you in advance if they plan to renew you automatically, and what terms they'll apply.
Before you call: get your numbers
- Your exact balance at maturity and remaining amortization
- The rate, term and type (fixed or variable) in your renewal offer
- Your best competing offer, in writing, with the lender's name
- Your prepayment privileges and penalty method, current and offered. A lower rate with a punishing penalty isn't always better.
Worksheet B-3 in the free worksheet pack lays out three offers side by side.
The phone script
Call the main mortgage line and ask to speak with the retention or renewals department. Then, roughly:
"Hi, my mortgage matures on [date] and I received your renewal offer at [rate] for [term]. I've been shopping around and I have a written offer from [lender] at [rate] for the same term. I'd prefer to stay with you, but I need you to match or beat that. What can you do?"
Then stop talking and let them answer. A few things that help:
- Be specific. A real lender name and rate is more persuasive than "I've seen lower rates online."
- Be ready to leave. The negotiation works best when switching is a real option, not a bluff.
- Ask about the whole package. If they can't move the rate, ask about better prepayment privileges, a fee rebate, or a different term.
- Get it in writing before you sign the renewal.
- Ask twice. If the first answer is no, ask whether anyone else can approve an exception. Retention teams often have more room than front-line staff.
If you switch: the straight switch
Moving your mortgage to a new lender at maturity is called a switch or transfer. There's no prepayment penalty, because your term has ended.
Since November 21, 2024, OSFI no longer expects federally regulated lenders to stress test uninsured borrowers who make a straight switch, meaning they move the same balance with the same amortization to a new lender at renewal. The federal government applied the same approach to insured mortgages. You still qualify at your actual contract rate, with the usual income, credit and property checks.
That change matters. Before it, borrowers who couldn't pass the stress test at today's rates had no realistic alternative to their current lender, and renewal pricing reflected it. Now, if you keep the switch straight, most borrowers can genuinely shop.
Typical switching costs are a discharge or transfer fee from your current lender, plus legal and appraisal costs that many new lenders cover. Ask each lender for their switch costs in writing.
Fixed or variable at renewal?
That depends on your budget, your plans, and how much payment uncertainty you can live with. A few questions to ask yourself:
- Could your budget absorb a higher payment if rates rose?
- Might you sell or refinance before the term ends? If so, a variable rate's three-month-interest penalty may be far cheaper than a fixed rate's IRD. See how penalties work.
- Would a shorter fixed term give you flexibility without full variable-rate exposure?
No one can reliably forecast rates. Choose the structure you can live with if your guess turns out wrong.
Use renewal as a checkup
Renewal is also your chance to change things without a penalty: shorten your amortization, increase your payment, switch to accelerated bi-weekly payments, or make a lump-sum payment. Even keeping your payment the same at a lower rate shortens your amortization automatically. Try different combinations with the prepayment calculator.