Mortgage Renewal in Ontario: Don't Sign the Letter Yet

Your mortgage renewal letter is an opening offer — not a bill. You don't have to sign it, you can switch lenders at renewal with no penalty, and on a typical Ontario balance the difference between auto-signing and shopping is around $14,000 over one five-year term. Here's exactly how the 120-day play works.

Why the letter is rarely your best offer

Banks know most people auto-sign. Renewal letters are priced for that inertia — often above what the same bank would offer a brand-new client, and above what 88+ competing lenders would offer you today. It's not personal; it's just economics. The letter is what they hope you'll take, not the best you can get.

This year it matters more than ever: hundreds of thousands of Canadians who locked rates under 2% in 2020–2022 are renewing into a very different market. If that's you, the gap between a shopped rate and a shrugged-at letter is real money every single month. (Feeling more squeezed than curious? Start with what to do if you're house poor instead.)

What auto-signing actually costs

Real numbers from our mortgage engine — a $501,000 balance with 20 years remaining, comparing a typical renewal-letter rate against a shopped rate (this week's "from" estimates are on the rates page):

	Sign the letter (4.79%)	Shop it (from 4.19%)
Monthly payment	$3,236	$3,077
Interest paid over the 5-year term	$109,316	$95,251
Balance left after 5 years	$416,178	$411,646

That's $159 a month, $14,065 in interest over the term — and you exit the term owing $4,500 less. For one phone call's worth of effort. Rates shown are illustrative as-of estimates; your exact numbers depend on your file, O.A.C.

The 120-day countdown

120 days out: start shopping — most lenders will hold a rate for up to 120 days, so there's zero risk in getting a competing number early. If rates drop before closing, you generally get the lower one. 90 days: put your bank's letter (when it arrives) against the market — I do this across 88+ lenders in one conversation. 30 days: lock the winner; if you're switching, the new lender handles most of the paperwork. Day 0: the new term starts. No penalty, no gap, no drama.

Don't want to track dates? The free Renewal Reminder pings you at exactly the right time — set it once and forget it.

Switch, stay, or restructure?

Stay when your bank actually matches the market — it happens, especially once they know you're shopping (funny how that works). Switch when another lender's rate or terms win: at renewal this is penalty-free, and a straight switch — same balance, same amortization — is generally exempt from re-passing the stress test, which surprises a lot of people. Restructure when your life changed: consolidating debt, pulling equity for a renovation, or re-extending your amortization to lower the payment — that's a refinance rather than a switch, and it opens different doors. Not sure which fits? That's the 15-minute conversation.

Renewal mistakes I see every month

Signing in the first week. The letter often arrives with a "respond by" urgency that has no teeth — your renewal date is the real deadline. Waiting until the last two weeks. Switching takes some paperwork; a great rate you can't close in time is worthless. Comparing only the rate. Prepayment room, penalty math, and portability matter when life changes mid-term. Not knowing your charge type. If your mortgage is registered as a collateral charge, switching involves an extra step — good to learn 120 days out, not 12.

Questions I hear every week

Can I really switch lenders at renewal without a penalty?

Yes — renewal is the one moment your mortgage is fully open. The prepayment penalty that protects your lender mid-term doesn't apply on the maturity date. A switching lender may cover or offset transfer costs; I'll show you the exact math for your file before you decide anything.

Will I have to re-pass the stress test to switch?

For a straight switch — same balance, same amortization — generally no; renewal switches are treated differently than new applications. If you're increasing the mortgage or changing the structure, that becomes a refinance and normal qualifying applies. Either way, we know which lane you're in before anyone pulls anything.

When should I actually start?

120 days before your renewal date — that's when rate holds begin. Starting early costs nothing and protects you in both directions: rates rise, you're locked; rates fall, you take the better number.

What if my finances got worse since I got the mortgage?

Tell me early — it changes the strategy, not the outcome. Your current lender will usually renew you regardless (they'd rather keep you than lose you), which gives us a guaranteed floor while we quietly check whether anyone still beats it.

Garry Sidhu is a licensed mortgage broker (Lic. #M21004814) with Akal Mortgages Inc. (FSRA #10845), serving Bradford, Barrie, Newmarket and all of Ontario for six years — 300+ families funded, most by referral.

This article is general information, not financial advice — talk to a licensed professional about your specific situation. Rate figures are illustrative estimates as of 2026-07-18 and change without notice. O.A.C.