Should you stay or switch at renewal?
When your term ends, you can renew with your current lender, or move the mortgage to another lender with no prepayment penalty. Lenders know most people simply sign the renewal letter, so the first offer is often not their best rate.
A difference of half a percentage point on a $450,000 balance is roughly $10,000 of interest over a five-year term. Switching costs, if any, are usually a few hundred dollars, and many lenders cover them to win your business.
How this calculator compares the options
It runs both mortgages month by month over the term, using the Canadian semi-annual compounding rule for fixed rates and the same remaining amortization. The net saving is the interest saved minus switching costs. "Costs recovered after" shows the month when the interest saved first exceeds what you paid to switch.
Breaking a mortgage early
Choose Break early when rates have dropped mid-term. The calculator compares the interest left on your current rate with a new rate over the same months, then subtracts the prepayment penalty. Fixed-rate penalties at big banks are often based on the interest rate differential, which can be many times three months' interest, so use a real figure from your lender.
Frequently asked questions
Do I pay a penalty to switch lenders at renewal?
No. At the end of your term the mortgage matures, so you can move it to another lender without a prepayment penalty. You may pay legal, appraisal or discharge fees, which new lenders often cover.
Do I have to pass the stress test to switch lenders?
Not for a straight switch at renewal. Since November 21, 2024, federally regulated lenders no longer apply the stress test to uninsured mortgages that switch lenders at renewal without increasing the amount or amortization. Insured mortgages were already exempt.
When should I start shopping for a renewal rate?
About four months before your term ends. Many lenders will hold a rate for around 120 days, and your current lender must send a renewal statement before the term ends. If you do nothing, the mortgage may renew automatically on terms you did not choose.
Is breaking my mortgage early ever worth it?
Sometimes, when rates have fallen sharply and the penalty is three months’ interest. With a large interest rate differential penalty, it rarely pays. Run the Break early option with the penalty your lender quotes.