October 27, 2025
When your lender emails a renewal offer, it may look simple: sign, lock in, and move on. But in many cases, that convenience comes at a cost. Most lenders send automated renewal letters quoting rates higher than what new clients are offered. The assumption is that existing borrowers won’t shop around. According to the Financial Consumer Agency of Canada, more than 60% of Canadians simply accept their first renewal offer—often paying 0.25% to 0.75% more than necessary. On a $450,000 mortgage, that difference can cost over $8,000 in extra interest over five years.
Renewing with your current lender isn’t always a bad choice, but you should treat it like a new mortgage, not a formality. Compare your lender’s offer to current market rates from other banks, credit unions, and monoline lenders. A mortgage broker can access these rates for you and determine whether switching—or negotiating—makes sense after accounting for discharge or legal fees. Many lenders will match or beat competing offers when pressed, especially if you approach them before the renewal date. Even a small rate reduction can translate into significant savings without changing your amortization or term length.
Beyond rate, look at product features. Does your renewal include prepayment flexibility, portability, or fair penalty calculations? Some lenders quietly change conditions at renewal, reducing prepayment privileges or switching to higher-penalty formulas. Others offer “blend and extend” options that seem attractive but can mask higher effective rates. Review every term before you sign—especially if you plan to sell, refinance, or relocate during the next term. The lowest number on paper doesn’t always equal the best deal.
The key takeaway: treat renewal season like an opportunity, not an obligation. Start reviewing your options 120 days in advance, gather written offers, and let your broker negotiate on your behalf. Loyalty is admirable, but in mortgages, it rarely pays. Taking one hour to compare can save thousands over the next five years—and that’s a return on time no investment fund can match.
Source: Absolute Mortgage Team