Renewal and switch, 120 days out
Never Sign The First Letter.
Your lender's renewal letter is an opening bid. Start 120 days before maturity and it becomes one option among three: renew, switch with no penalty, or refinance.
At a glance
Three Things To Know Before Maturity.
The letter arrives late and opens high. Starting early is what changes the number.
When to start
120days
Most lender rate holds run 90 to 130 days. A hold set four months out carries you to maturity.
The statement deadline
21days
Federally regulated lenders must send a renewal statement at least 21 days before maturity. It routinely opens above new-client pricing.
On a straight switch
$0penalty
Same balance, same remaining amortization, no new money: no prepayment penalty at maturity. Mid-term, a transfer is a refinance.
Scroll to walk through it.
01 · The Clock
Start 120 Days Out.
Most lender rate holds run 90 to 130 days, so four months before maturity is when a hold carries you to the end of the term. A federally regulated lender must send its renewal statement at least 21 days before maturity. By then the shopping should already be done.
Illustrative timeline. Rate holds typically run 90 to 130 days; federally regulated lenders must send the renewal statement at least 21 days before maturity.
02 · Three Doors
Renew, Switch, Or Refinance.
At maturity you can sign the letter, move the same mortgage to a new lender, or borrow more. A straight switch keeps the balance and the remaining amortization, adds no new money, and carries no prepayment penalty. A refinance changes the loan itself and is qualified from scratch.
Renew as offered
Switch
The loan itself
Same balance, same remaining amortization, no new money
Same balance, same remaining amortization, no new money
Prepayment penalty
None at maturity
None at maturity
Rate
The letter's opening rate, routinely above new-client pricing
Shopped across 97+ lenders
Appraisal and legal
Not required
Frequently covered by the new lender
Stress test
No new application to pass
Not re-tested on a straight switch at federally regulated lenders
03 · The Letter
The Letter Is An Opening Bid.
Renewal letters routinely open above the rates the same lender offers new clients. Held flat for a 5-year term, the gap between an illustrative 5.25% letter and a 4.50% shopped rate never closes on its own. It closes when you ask.
Illustrative: a 5.25% renewal offer against a 4.50% shopped rate, both held flat for the 5-year term. Rates change daily and depend on your file.
04 · The Payment
Same Mortgage, Two Payments.
On a $600,000 balance with 25 years left, the illustrative 5.25% letter costs about $3,576 a month. The same mortgage at 4.50% costs about $3,321. Nothing else about the loan changed.
Illustrative: $600,000 balance, 25-year remaining amortization, monthly payments, semi-annual compounding, rounded to whole dollars.
05 · The Difference
What Asking Is Worth.
About $255 a month, or roughly $15,300 across a 5-year term, on an illustrative file. On a straight switch the new lender frequently covers the appraisal and legal or transfer fees. Mid-term is different: a transfer before maturity is a refinance and triggers the penalty.
$255
per month for the term, illustrative
About $15,300 over 60 payments
Fit
A Switch Is Not For Every File.
Who it suits
- Anyone whose mortgage matures inside the next four months.
- Uninsured borrowers who were told the stress test kept them with their lender. Since late 2024 a straight switch at renewal doesn't require re-passing it at federally regulated lenders.
- Owners who want the same balance and the same remaining amortization, at a better rate.
- Anyone holding a renewal letter that opens above what the same lender advertises to new clients.
Who should be careful
- Anyone thinking of moving mid-term. A transfer before maturity is a refinance and triggers the prepayment penalty.
- Owners who want to add money for renovations, debt consolidation, or a longer amortization. That is a refinance, with its own qualification.
- Anyone whose file has changed since the original approval. A switch is still a new application with the new lender, so documents and the property get reviewed — even though a straight switch at maturity does not require re-passing the stress test at federally regulated lenders. Renewing in place may be the simpler path.
- Anyone inside 30 days of maturity with no plan. Rate holds and lender timelines get tight, so call before signing anything.
Questions
What Clients Ask First.
- 01Does switching lenders at renewal cost a penalty?
- No. At maturity the term is over, so a straight switch — same balance, same remaining amortization, no new money — carries no prepayment penalty. Moving mid-term is different: that is treated as a refinance and the penalty applies. On a straight switch the new lender frequently covers the appraisal and legal or transfer fees.
- 02Do I have to pass the stress test again to switch?
- Usually not. Insured mortgages switch without re-qualifying at the stress test. Since late 2024, an OSFI rule change means uninsured straight switches at renewal also don't require re-passing it at federally regulated lenders. Adding money or extending the amortization is a refinance, and a refinance is qualified from scratch.
- 03When should I start?
- About 120 days before maturity. Most lender rate holds run 90 to 130 days, so a hold set four months out covers you to the end of the term. Your current lender, if federally regulated, must send its renewal statement at least 21 days before maturity — by then the comparison should already be done.
- 04Why is my renewal letter's rate higher than what the bank advertises?
- Renewal letters routinely open above the rates the same lender offers new clients. Treat the letter as an opening bid, not a final offer. Comparing it against the market — I shop 97+ lenders through Get A Better Mortgage Inc. — shows what your file actually qualifies for.
Educational content, not advice and not a commitment to lend. Rates and figures are illustrative examples, not quotes — rates change daily and depend on your file. Mortgage services provided by Matthew Im, Mortgage Agent Level 1 (Licence #M24000738), Get A Better Mortgage Inc., FSRA Brokerage Licence #10874. Speak to an accountant about tax questions.
Renewal Review
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