Save thousands on your next mortgage term — if you know where to look
Ratesopedia’s Take: If your mortgage term ends in 2026, your renewal rate will likely be higher than your current rate — but not as high as your bank’s first offer. The best 5-year fixed renewal rates in Canada currently sit around 3.99%, while variables hover near 3.35%. Shopping around before signing your renewal letter could save you $10,000 or more over five years.
Your mortgage renewal is one of the largest financial decisions you’ll make. In 2026, approximately 1.15 million Canadian mortgages are coming up for renewal — many locked in at historic lows between 1.39% and 2.5% during 2020-2021.
If you simply sign your bank’s renewal offer, you could pay thousands more than necessary. This guide shows you how to compare renewal mortgage rates and secure the best deal available.
What Are Renewal Mortgage Rates?
Renewal mortgage rates are the interest rates available when your current mortgage term expires. In Canada, most mortgages have terms of 1 to 5 years, even though your amortization may be 25 or 30 years.
When your term ends, you must renew into a new contract with a new rate. Your lender will send you a renewal statement 21 to 120 days before your term expires, outlining their proposed rate and terms.
The renewal rate your bank offers is rarely their best available rate. It’s simply their starting position in what should be a negotiation.
Current Renewal Rates Canada 2026
As of March 27, 2026, renewal mortgage rates have stabilized following the Bank of Canada’s decision to hold its overnight rate at 2.25%. The prime rate sits at 4.45% across major Canadian banks.
| Term | Type | Best Rate | Average Rate |
|---|---|---|---|
| 3-year fixed | Insured | 4.20% | 4.73% |
| 5-year fixed | Insured | 3.99% | 4.74% |
| 3-year variable | Insured | 3.60% | 5.00% |
| 5-year variable | Insured | 3.35% | 4.22% |
Rates and terms may vary by financial institution. Insured mortgages typically qualify for the lowest rates, while conventional mortgages (20% or more equity) may see rates 10 to 30 basis points higher.
If you locked in a 5-year fixed rate in 2021 at 1.39%, you’re looking at a rate increase of approximately 260 basis points. On a $400,000 mortgage, this translates to roughly $550 more per month.
Payment Impact Example
Consider a household that took out a $600,000 mortgage in February 2021 at 1.77% with 23 years remaining. Their monthly payment was approximately $1,850. Renewing at 3.84% would push that payment to $2,400 monthly — an increase of $550 or $6,600 annually.
Fixed vs Variable at Renewal
The choice between fixed and variable rates at renewal depends on your risk tolerance and rate outlook. Each option carries distinct advantages and trade-offs.
Fixed Rate Renewals
- Payment certainty: Your rate stays locked for the entire term, making budgeting straightforward
- Protection from increases: If rates rise, you’re insulated from payment shock
- Popular choice: Five-year fixed terms are Canada’s most common mortgage product
- Current pricing: Best 5-year fixed rates around 3.99% as of March 2026
- Higher starting rate: Fixed rates typically cost 50 to 75 basis points more than variable initially
- Expensive penalties: Breaking a fixed mortgage early triggers interest rate differential penalties that can reach $15,000 or more
- Missed savings: If variable rates drop significantly during your term, you won’t benefit
Variable Rate Renewals
- Lower initial rate: Currently around 3.35% for 5-year terms, about 65 basis points below fixed
- Rate decrease potential: If the Bank of Canada cuts rates further, your payment drops automatically
- Cheaper penalties: Breaking early typically costs just three months’ interest
- Flexibility: Easier to exit if you need to sell or refinance
- Payment uncertainty: Your rate fluctuates with Bank of Canada announcements
- Budgeting complexity: Harder to predict housing costs over the full term
- Potential increases: If rates rise unexpectedly, you’re exposed immediately
How to Compare Renewal Offers
Most Canadian lenders offer similar rates for both new mortgages and renewals. Your bank’s renewal offer is a starting point, not your only option. Here’s how to evaluate competing offers effectively.
- Start early: Begin comparing rates 90 to 120 days before your term expires to maximize negotiating leverage
- Check multiple sources: Compare your current lender, major banks, credit unions, and mortgage brokers
- Look beyond the rate: Consider prepayment privileges, portability options, and penalty calculations
- Verify all fees: Some lenders charge appraisal or legal fees when switching, while others cover these costs
- Calculate total cost: A slightly higher rate with better terms may cost less over five years than the lowest advertised rate
As of March 2026, many lenders are offering cash bonuses up to $4,000 for borrowers who switch at renewal. These incentives can offset any minor rate differences between lenders.
Switching Lenders at Renewal
You’re not obligated to renew with your current lender. Switching to a competitor often yields better rates and terms — and it’s easier than most borrowers realize.
As of November 21, 2024, a major regulatory change removed the mortgage stress test requirement for straight switches at renewal. If you’re moving to another federally regulated lender without increasing your mortgage amount or extending your amortization, you don’t need to requalify.
What Is a Straight Switch?
A straight switch means transferring your existing mortgage to a new lender at renewal with no changes to the principal balance or remaining amortization. Your new lender simply takes over your current mortgage under new rate and term conditions.
This process typically takes 2 to 4 weeks and requires minimal documentation. The new lender often covers legal fees and appraisal costs as part of their switch incentive.
Steps to Switch Successfully
- Shop rates 120 days out: Contact multiple lenders or work with a mortgage broker to compare offers
- Present competing offers: Show your current lender what competitors are offering and ask them to match or beat it
- Verify switch incentives: Confirm whether the new lender covers legal fees, appraisal costs, or offers cash back
- Review all terms: Ensure prepayment privileges, portability, and penalty structures meet your needs
- Submit documentation: Provide proof of income, property tax statements, and mortgage details to the new lender
- Complete the transfer: The new lender handles discharge and registration with your current lender
According to 2020 data, 90.4% of Canadian mortgage renewals occurred with the same lender. This suggests most borrowers aren’t comparing alternatives — leaving significant savings on the table.
Negotiating a Lower Renewal Rate
Your bank’s initial renewal offer is almost never their best rate. The gap between posted renewal rates and the discretionary floor typically ranges from 20 to 50 basis points.
On a $600,000 mortgage over five years, a 40-basis-point reduction saves approximately $14,000 in interest. Here’s how to negotiate that discount.
- Gather competing offers: The strongest negotiating position comes from real rate quotes from other lenders
- Call your lender directly: Speak to a mortgage specialist, not the general customer service line
- Reference specific competitors: Mention the lender name and exact rate you’ve been quoted elsewhere
- Ask for rate match plus incentive: Request that they match the competitor rate and add a cash-back bonus or fee waiver
- Be prepared to switch: If they won’t negotiate seriously, follow through and move to the better offer
Banks have less incentive to offer competitive rates at renewal because they already have your business. Your willingness to switch is your primary leverage.
Who Should Renew Early?
For many borrowers, starting the renewal process early provides more flexibility and potential savings. You can begin shopping up to 120 days before your term ends without triggering penalties.
Early Renewal Makes Sense If:
- Rates are rising: Locking in current rates protects you from increases over the next few months
- You want certainty: Securing your rate early eliminates anxiety about market fluctuations
- You need time to compare: Starting early gives you leverage to negotiate with multiple lenders
- You plan a lump sum payment: Some borrowers prefer to reduce their balance before renewing at a higher rate
Wait Until Maturity If:
- Rates are falling: If the Bank of Canada signals further cuts, delaying may yield a better rate
- You’re selling soon: If you plan to move within the next year, avoid locking into a long term
- Your finances changed: If your income dropped significantly, you may not qualify with a new lender and should renew with your current bank
Understanding Your Renewal Statement
Your renewal statement outlines the interest rate, term length, payment amount, and conditions your current lender is proposing. It typically arrives 21 to 120 days before your term expires.
This document is not a take-it-or-leave-it offer. It’s your lender’s opening position, and you have several options.
- Proposed rate: The interest rate your lender is offering, often higher than their best available rate
- Term options: Typically shows payment scenarios for 1-year, 3-year, and 5-year terms
- New payment amount: How your monthly payment would change under each term option
- Prepayment privileges: The amount you can pay down annually without penalty
- Acceptance deadline: The date by which you must respond to accept, negotiate, or switch lenders
Do not sign immediately. Use this statement as the baseline for comparing what other lenders are willing to offer.
Bottom Line
Your mortgage renewal is a negotiation, not an automatic event. With approximately 1.15 million Canadian mortgages renewing in 2026, many borrowers will face payment increases of 15% to 40% if they simply accept their bank’s first offer.
The best 5-year fixed renewal rates currently sit around 3.99%, while 5-year variables are near 3.35%. By shopping around, negotiating with your current lender, or switching to a competitor, you could save $10,000 to $15,000 over your next term.
Start comparing rates 90 to 120 days before your term expires. Get competing quotes. Present them to your current lender. And be prepared to switch if they won’t match the best available rate. For the latest mortgage offers and expert guidance, sign up for our newsletter to stay informed.
