Mortgage renewal rates are the interest rates offered by lenders when your current mortgage term ends and you sign a new contract. In Canada, renewal rates are based on prevailing market rates at the time of renewal, which can be significantly higher or lower than your original rate. Understanding renewal rates is crucial because they directly impact your monthly payment and the total interest you will pay over your next term. For many Canadians, especially those renewing in 2026, this process involves managing higher rates than they secured during the low-rate environment of the pandemic.
How Mortgage Renewal Rates Are Determined
Your mortgage renewal rate is not a continuation of your old rate but a new rate based on current market conditions. Lenders set these rates according to their posted rates for new mortgages, which are influenced by the Bank of Canada's policy rate, bond yields, and competitive pressures. For example, as of October 2026, the Bank of Canada's policy rate sits at 2.25%. Your renewal offer will reflect the lender's standard rates for the term and product type you choose, such as a fixed or variable rate mortgage. It is common for the initial renewal letter from your current lender to present a default offer that may not be their most competitive rate. This is why shopping around and negotiation are essential steps in the renewal process to potentially secure a lower rate. The renewal statement you receive outlines the new interest rate, mortgage term, payment amount, and renewal options your current lender is offering once your term ends.
The Renewal Process and Key Timelines
The mortgage renewal process begins when your lender sends you a renewal statement, typically several weeks before your term's maturity date. This statement outlines the new interest rate, mortgage term, payment amount, and options your lender is offering. You have the right to shop for a better rate with other lenders up to 120 days before your mortgage term ends without incurring a penalty. Starting early provides crucial flexibility to compare offers, negotiate with your current lender, or arrange to switch to a new one. If you wait until the last minute, your options become limited and you may feel pressured to accept your lender's first offer. The renewal process itself involves signing a new contract, and generally, your original mortgage amount and amortization period do not change. For many borrowers, starting the renewal process early is the better option as it gives you time to compare offers from different lenders, negotiate with your current bank, make a lump-sum payment to reduce your balance, or choose a different mortgage term.
Following a structured set of steps can help you manage renewal successfully and avoid common pitfalls. You can typically begin shopping for renewal rates up to 120 days before your mortgage term ends without paying a penalty. This gives you time to compare offers from different lenders and negotiate with your current bank. It is also important to assess your own finances as a key step when renewing. A simple way to estimate the cost of your next mortgage term is to use a mortgage renewal calculator.
- Wait for your current lender to send the renewal offer letter.
- Begin shopping for rates with other lenders or a mortgage broker up to 120 days in advance.
- Use a mortgage renewal calculator to estimate new payment costs under different rates.
- Do not accept your lender's first offer. Ask for rates more in line with advertised discounted rates.
- Negotiate by presenting competitive offers from other institutions.
- Finalize your new mortgage contract before your current term expires.
It is important to review all terms carefully, including prepayment privileges and penalty rules, before signing the new agreement. Many alternative lenders work exclusively with mortgage brokers. This means that even if you take care of the comparisons yourself, you may need to involve a broker to get your application underway at the lender of your choosing. A mortgage broker can negotiate on your behalf, or you can negotiate directly. The most effective way to negotiate a lower renewal rate is to shop around first and compare rates.
Comparing Fixed and Variable Renewal Rates
At renewal, you must choose between a fixed or variable interest rate, each with distinct characteristics. A fixed rate mortgage locks in your interest rate for the entire term, meaning your payment amount stays the same and you know exactly how much interest you will pay. With a variable rate mortgage, the interest rate fluctuates with your lender's prime rate, which is influenced by the Bank of Canada. Your payments may stay constant, but the portion going to principal versus interest changes. If rates rise, more goes to interest. As of late September 2026, fixed renewal rates saw significant increases, with 25-basis point increases not uncommon, making rates under 4.2% challenging to find. Variable rates were more stable but subject to change based on the Bank of Canada's decisions, such as its October 28 overnight rate decision in 2026. The choice often depends on your comfort with risk and expectations for future rate movements. Fixed rate mortgages are a good choice if you expect interest rates to rise during the term and you want to lock in a lower interest rate now, while variable rates are good if you are confident that interest rates will remain stable or that the average of the variable interest rate over your term will be lower than a fixed rate.
Negotiating Your Renewal and Switching Lenders
The most effective way to secure a better renewal rate is to negotiate with your current lender using competing offers as leverage. You can contact a mortgage broker or begin contacting other lenders directly to gather rate quotes. Present these quotes to your current lender and ask them to match or improve their offer. If they refuse, you can switch to a new lender at renewal. As of November 21, 2024, borrowers who switch lenders at renewal may be exempt from the mortgage stress test, provided the mortgage amount and amortization do not change and the institution is federally regulated. However, if you have a collateral mortgage, switching is more complex and often requires paying legal fees to discharge the charge, which can deter moving to a new lender even if better rates exist elsewhere. In a collateral mortgage, the lender registers your home with a collateral charge for a higher amount than the mortgage loan amount that you initially need, and this charge cannot be transferred. Because of these added costs, many borrowers with collateral mortgages choose to stay with their existing lender at renewal, though some lenders will cover the fees for you to incentivize you to switch.
Renewal Eligibility and Potential Denial
In most cases, lenders will renew your mortgage if you have made payments on time and your financial situation has not deteriorated significantly. However, a lender can choose not to renew if your income has dropped, your debt has increased substantially, or your credit profile has worsened. If your renewal is denied, you still have options, including switching to another lender. This can often be done through a straight switch where your mortgage amount and amortization stay the same, and you may not need to requalify under the stress test rules. It is important to start the renewal process early to identify any potential issues with your current lender and explore alternatives if necessary. Assessing your own finances is an important step when renewing, and there are ways to lower your monthly payment for your next mortgage contract, even if rates have risen.
Current Mortgage Renewal Rates in Canada
As of October 2026, renewal rates are aligned with lenders' purchase mortgage rates. The market offers a range of options from major banks and alternative lenders. The table below provides a snapshot of advertised rates from major financial institutions as of recent data, though actual rates offered to you will depend on your financial profile and mortgage details. For example, among Canada's Big Five banks, Scotiabank advertises the lowest five-year fixed mortgage rate in Ontario at 4.24%, while RBC and Scotiabank advertise the lowest five-year variable mortgage rate at 3.65%. Actual renewal rates may vary based on your financial profile and mortgage details.
| Lender | Product | Advertised Rate (2026) |
|---|---|---|
| Scotiabank | 5-Year Fixed (Ontario) | 4.24% |
| RBC / Scotiabank | 5-Year Variable | 3.65% |
| Various Brokerages | 3- or 5-Year Fixed | Around 4.2% |
| Various Lenders | Variable Rates | 3.4% or higher |
It is critical to look beyond the headline interest rate when comparing offers. You should also compare the overall mortgage terms, flexibility, prepayment privileges, penalty rules, portability options, and any fees or incentives such as cashback offers or covered legal fees. Consider whether the lender is offering a fixed or variable mortgage rate. You should understand how the renewal affects your payment amount and total interest paid. Finally, you must assess whether the term and amortization align with your financial goals.
Using Tools and Calculating New Payments
A simple way to estimate the cost of your next mortgage term is to use a mortgage renewal calculator. You enter your potential renewal details, including the new interest rate and any changes you may be considering to the amortization period, rate type or payment frequency. Compare the results to your current mortgage payment to find out how much more you could be paying upon renewal. Running these numbers yourself can be helpful, but consider your lender or mortgage broker to be the ultimate source of truth when it comes to determining the cost of your renewal. For instance, after 5 years, a fixed rate increasing from 2% to 5% could change a monthly payment from $2,024 to $2,631. It’s very likely that your mortgage interest rate will change when you renew because renewal rates are based on lenders’ current mortgage rates, so if rates have risen or fallen since you signed your last mortgage, your next rate will almost certainly be different.
Common Mistakes to Avoid During Renewal
Many homeowners make avoidable errors during the mortgage renewal process, which can lead to higher costs. A common mistake is accepting the first renewal offer from your current lender without shopping around. Another is waiting until the last minute, which removes your bargaining power and time to arrange a switch. Failing to read the renewal statement carefully can mean overlooking changes to terms or missing instructions on how to negotiate. Some borrowers also neglect to consider their broader financial goals, such as wanting to pay off their mortgage sooner, when selecting a new term or product. Additionally, not understanding the implications of a collateral mortgage can lead to unexpected legal fees if switching lenders. Using a mortgage renewal calculator and consulting with a mortgage broker can help you avoid these pitfalls. The most effective way to negotiate a lower renewal rate is to shop around first and compare rates, and by checking what other lenders are offering and what you qualify for, you gain real leverage when speaking with your current lender.
The 2026 Renewal Context and Market Outlook
2026 is one of the busiest mortgage renewal years in recent history, as Canadians who bought during the height of the pandemic come up for renewal. Many homeowners who secured historically low rates are now facing higher payments. For most borrowers, rates will likely settle in the 2–2.75% range, meaning renewals may still come with higher payments than expected. Mortgage renewal is becoming a murkier proposition as of October 2026, with fixed renewal rates rising significantly in late September. Variable renewal rates remained stable for most of October 2026, but the Bank of Canada’s October 28 overnight rate decision complicated things. If the Bank held the overnight rate, variable renewal rates would continue hovering at their current levels, but if it announced a rate hike, variable rates would shoot up as well. A growing number of analysts expected the Bank to announce an increase, but some analysis suggested a rate hike would throttle economic growth at a time when it’s increasingly hard to come by, leading to an expectation that the Bank would hold. Whatever the Bank decides, variable renewal rates will remain the most affordable option for months to come.
Frequently asked questions
What is a good mortgage renewal rate right now?
As of October 2026, good renewal rates are aligned with current purchase mortgage rates. Three- and five-year fixed renewal rates can be found for around 4.2% at some brokerages. Variable renewal rates are generally 3.4% or higher. Among Canada's Big Five banks, Scotiabank advertises the lowest five-year fixed mortgage rate in Ontario at 4.24%, while RBC and Scotiabank advertise the lowest five-year variable rate at 3.65%. Your personalized rate will depend on your financial profile and mortgage details.
How far in advance should I start shopping for renewal rates?
You should start shopping for renewal rates up to 120 days before your mortgage term ends. This early start gives you time to compare offers from different lenders, negotiate with your current bank, and arrange any necessary paperwork if you decide to switch. Renewing early does not lock you in immediately. If rates improve before your maturity date, you can still take advantage of them. Waiting until the last minute limits your options.
What should I do if I have a collateral mortgage?
If you have a collateral mortgage, switching lenders at renewal is more complicated and often more expensive. A collateral charge is registered for a higher amount than your loan, allowing for future borrowing. To switch, you typically need to pay legal fees to discharge this charge, as it cannot be transferred. Because of these added costs, many borrowers with collateral mortgages choose to stay with their existing lender, though some new lenders may cover the fees to incentivize a switch.
Can my lender deny my mortgage renewal?
In most cases, your lender will not deny your renewal if you have made payments on time and your financial situation is stable. However a lender can choose not to renew if your income has dropped your debt has increased substantially or your credit profile has worsened. If your renewal is denied you still have options including switching to another lender at renewal. This can often be done through a straight switch where your mortgage amount and amortization stay the same and you may not need to requalify for the mortgage stress test.
What is the difference between renewal and refinancing?
A mortgage renewal involves taking out a new rate and term by signing a new contract when your existing mortgage term expires. Your original mortgage amount and amortization period generally do not change. A mortgage refinance means making significant changes to your mortgage such as altering the principal amount the amortization period or the type of mortgage. Borrowers can refinance at renewal time without a penalty or break their mortgage mid term to refinance and pay the required mortgage refinance penalties.
Do I have to pass the stress test when renewing with a new lender?
Borrowers who switch lenders at renewal may be exempt from the mortgage stress test as of November 21 2024. This exemption applies if your mortgage amount and amortization do not change and the mortgage is held with a federally regulated financial institution. This rule makes it easier to switch lenders for a better rate. If you are changing your mortgage amount or amortization you will likely need to requalify under the stress test rules.
Sources and further reading
- Best mortgage renewal rates in Canada ratehub.ca
- Understand Mortgage Renewal Rates rbcroyalbank.com
- Today's Mortgage Renewal Rates in Canada nerdwallet.com
- Mortgage rates across Canada 1 cibc.com
- The best mortgage rates in Canada right now financialpost.com
This article explains how things work and is not financial, tax or legal advice. Rules, limits and rates change, so check the current figures with the Canada Revenue Agency, your province or your financial institution before you act.