Mortgage renewals

Mortgage Renewal vs. Switching Lenders: Which Is Better?

February 12, 2026

When your mortgage term is nearing its end, you are faced with an important financial decision: should you renew your mortgage with your current lender or switch to a new one? This choice can significantly affect your interest costs, flexibility, and long-term financial stability. Many Canadian homeowners automatically renew without reviewing alternatives, often missing out on better opportunities.

Understanding the difference between mortgage renewal and switching lenders allows you to make a confident decision that aligns with your financial goals.

What Is a Mortgage Renewal?

A mortgage renewal happens when your existing mortgage term expires and you continue your mortgage with the same lender under a new term and interest rate. The mortgage balance remains the same, and the amortization continues from where it left off.

In Canada, most lenders send renewal offers several months before the term ends. These offers typically include a choice of new terms and interest rates, but they are often higher than the best rates available in the market.

Mortgage renewal is generally straightforward and does not require a new mortgage application. For homeowners who prefer simplicity, it can be an appealing option.

How Mortgage Renewal Works in Canada

When your mortgage term ends, your lender will contact you with renewal options. You can accept the offer, negotiate for better terms, or allow the mortgage to convert to an open mortgage if no action is taken.

Most lenders do not require income verification or credit checks at renewal, making it easier for borrowers whose financial circumstances have changed. However, this convenience can come at a cost if the interest rate offered is not competitive.

What Does Switching Mortgage Lenders Mean?

Switching lenders involves transferring your existing mortgage to a new financial institution at the end of your term. This process is often referred to as a mortgage switch or mortgage transfer.

Unlike refinancing, switching lenders does not increase your loan amount or require you to access home equity. The primary goal is to secure a better interest rate or improved mortgage terms.

Switching lenders requires you to requalify under current lending guidelines, including income verification, credit assessment, and stress test requirements.

Mortgage Renewal vs. Switching Lenders: Key Differences

The main difference between renewing and switching lies in cost, flexibility, and effort. Renewal prioritizes convenience, while switching focuses on optimization and savings.

With renewal, homeowners benefit from speed and simplicity but may pay a higher interest rate. Switching lenders requires more paperwork and time, but it often results in better rates and mortgage features.

Understanding these trade-offs is crucial before making a final decision.

Interest Rates: Renewal vs. Switching

Interest rates play a major role in deciding between renewing and switching. Many lenders offer higher-than-market rates at renewal, assuming borrowers will accept them without comparison.

Switching lenders allows homeowners to shop around and access competitive rates. Even a small difference in interest rate can translate into thousands of dollars in savings over the life of the mortgage.

For homeowners focused on minimizing interest costs, switching lenders is often the more attractive option.

Qualification Requirements at Renewal vs. Switching

One of the biggest advantages of mortgage renewal is that requalification is usually not required. This can be beneficial if your income has decreased, you have become self-employed, or your credit profile has changed.

Switching lenders, on the other hand, requires full qualification under current mortgage rules. This includes meeting stress test requirements and providing updated financial documentation.

If qualifying again may be challenging, renewing with your current lender may be the safer choice.

Costs Involved in Switching Mortgage Lenders

Switching lenders can involve certain fees, such as appraisal costs, legal fees, and mortgage discharge fees. These costs vary depending on the lender and province.

However, many lenders offer incentives to attract new borrowers. These incentives often cover most or all switching costs, making the transition more affordable than many homeowners expect.

It is important to calculate the net savings after fees to determine whether switching is financially worthwhile.

Pros of Renewing Your Mortgage

Mortgage renewal offers convenience and simplicity. The process is quick, paperwork is minimal, and there are typically no additional costs involved.

Renewal also provides stability, especially for homeowners who are satisfied with their current lender and mortgage terms. For those with complex financial situations, avoiding requalification can be a major advantage.

Cons of Renewing Your Mortgage

The biggest drawback of renewing is the potential for higher interest rates. Many borrowers unknowingly accept renewal offers that are not competitive.

Renewing without exploring other options can also limit access to better mortgage features, such as flexible prepayment options or lower penalty structures.

Over time, these limitations can increase overall mortgage costs.

Pros of Switching Mortgage Lenders

Switching lenders offers the opportunity to secure lower interest rates and better mortgage terms. Many homeowners switch to reduce monthly payments or shorten their amortization period.

In addition to rate savings, switching can provide access to more flexible mortgage features that better align with long-term financial plans.

For borrowers who qualify, switching lenders can deliver significant financial benefits.

Cons of Switching Mortgage Lenders

The main disadvantage of switching lenders is the need to requalify and complete additional paperwork. This process can take time and requires careful coordination.

There may also be upfront costs, although these are often offset by lender incentives. For some homeowners, the effort involved may outweigh the benefits.

When Mortgage Renewal Is the Better Option

Mortgage renewal may be the better choice if your financial situation has changed and qualifying again could be difficult. It is also ideal for homeowners who value convenience and are comfortable with the rate offered.

If the difference between your lender’s renewal rate and market rates is minimal, renewal may still make sense.

When Switching Lenders Makes More Sense

Switching lenders is often the better option when your current lender’s rate is significantly higher than market rates. It is also ideal if you want better mortgage features or plan to pay off your mortgage faster.

Homeowners with stable income, strong credit, and clear financial goals often benefit most from switching.

The Importance of Comparing Both Options

One of the biggest mistakes homeowners make is not comparing renewal and switching options. Reviewing both allows you to make an informed decision based on facts rather than convenience.

Comparing rates, terms, fees, and features ensures your mortgage continues to support your financial goals.

Final Thoughts: Mortgage Renewal vs. Switching Lenders

There is no universal answer to whether mortgage renewal or switching lenders is better. The right choice depends on your financial situation, market conditions, and long-term plans.

Mortgage renewal offers simplicity and peace of mind, while switching lenders can unlock savings and improved flexibility. Taking the time to evaluate both options ensures you make the best possible decision for your financial future.

Is it better to renew a mortgage or switch lenders?

It depends on your financial situation. Renewing is easier and faster, while switching lenders can help you secure lower rates and better mortgage terms.