Key Takeaways
- 1The biggest cost in any renewal decision is the difference in interest rate between the two offers, multiplied by your balance and your term, not the small one-time fees.
- 2Switching at the end of your term usually has no early-exit penalty, but it can bring costs such as legal work, a discharge fee, and sometimes a home valuation.
- 3Some lenders offer to cover part or all of those switching costs, but offers vary and change, so ask for them in writing.
- 4Since November 2024, many borrowers with uninsured mortgages can switch lenders at renewal without taking a new stress test, as long as the loan amount and repayment period do not increase.
- 5Price is not the only difference: prepayment options, how the mortgage is registered, and how the early-exit penalty is worked out can matter as much as the rate.
- 6Start comparing early, because many lenders hold a rate for up to several months, and your lender must send your renewal details at least 21 days before your term ends.
Your renewal letter arrives and the decision feels simple: sign and stay, or spend a few weeks switching to someone else. What makes it hard is that the two choices are rarely priced on the same page. One has a rate on a letter, the other has a rate plus a list of small costs nobody mentions up front.
This guide puts both sides on one table so you can see what each choice actually costs, step by step. It uses clearly labelled made-up numbers to show the method, because real rates change often and yours depends on your own file.
Quick answer: Neither option is always cheaper. Renewing with your current lender usually costs nothing extra but may come with a less competitive offer, while switching can lower your interest but adds a few one-time costs. The real test is simple: add up the interest you would save over your term and subtract the one-time costs of moving. If the savings are clearly larger, switching tends to win. If the gap is small, staying is often the easier and equally sensible choice. A licensed mortgage broker can compare your renewal offer against other lenders.
Below, you'll find the cost lines side by side, a worked example you can copy for your own numbers, the non-price differences worth checking, and a five-step way to decide this month.
Key Takeaways
- The biggest cost in any renewal decision is the difference in interest rate between the two offers, multiplied by your balance and your term, not the small one-time fees.
- Switching at the end of your term usually has no early-exit penalty, but it can bring costs such as legal work, a discharge fee, and sometimes a home valuation.
- Some lenders offer to cover part or all of those switching costs, but offers vary and change, so ask for them in writing.
- Since November 2024, many borrowers with uninsured mortgages can switch lenders at renewal without taking a new stress test, as long as the loan amount and repayment period do not increase.
- Price is not the only difference: prepayment options, how the mortgage is registered, and how the early-exit penalty is worked out can matter as much as the rate.
- Start comparing early, because many lenders hold a rate for up to several months, and your lender must send your renewal details at least 21 days before your term ends.
The Real Question: What Does Each Choice Cost You?
When you renew, it is easy to compare only the rate on the letter with a rate you saw online. A fair comparison asks a bigger question: after every cost on both sides, which option leaves more money in your pocket over the whole term?
Definition moment: A term (the length of time your rate and conditions are locked in, often five years) is different from the repayment period, which is the total number of years it will take to pay the mortgage off. At renewal you are choosing a new term; the repayment period usually carries on.
That matters because the savings from a better rate only last as long as the term. So the cost comparison below is always calculated over one term, not forever.
Bottom line: Compare the total cost of each choice over one term, including one-time costs, not just the headline rate.
The Cost Comparison, Line by Line
Here is every cost worth checking, laid out for both choices. Items marked "ask" vary by lender.
Cost line | Renew with your current lender | Switch to a new lender |
|---|---|---|
Interest on your balance | Whatever rate they offer you at renewal; often negotiable | The new lender's rate for your situation, which may be lower or similar |
Early-exit penalty | None, because the term has ended | None if you switch when your term ends; a penalty can apply if you switch earlier |
Legal and registration work | Usually none or minimal | Often needed; ask whether the new lender covers it |
Discharge fee | None | Your current lender may charge a fee to release its claim on your home; ask for the amount |
Home valuation | Usually not needed | Sometimes required; ask who pays |
Qualifying again | Usually not needed | Often lighter than a new purchase, but income and credit are still reviewed |
Time and paperwork | A signature in many cases | A few weeks of documents and steps |
Notice that most rows favour staying in effort and favour switching in price. The decision comes down to whether the price gap is big enough to cover the effort and the one-time costs.
Definition moment: A discharge fee (a charge from your current lender for formally releasing its legal claim on your home so a new lender can take over) is one of the costs people most often forget, since it never appears in a rate comparison.
Bottom line: Staying is cheaper in effort, switching is cheaper in interest, and the table above is how you find out which one wins for you.
What Ontario homeowners often miss: Some lenders will cover part of the legal and valuation costs when you switch to them, and some will not. Ask each lender in writing what they pay for, since a "free switch" can still leave a discharge fee on your side.
Definition moment: A straight switch (moving your mortgage to a new lender at renewal without borrowing more or stretching the repayment period) is the simplest kind of switch and the one that gets lighter qualifying rules in many cases.
A Worked Example With Made-Up Numbers
Example only: these are round, made-up numbers to show the method. They are not real rates, quotes, or typical costs, and your own results will be different.
Say your balance at renewal is $400,000. Your current lender offers a rate, and another lender offers one that is 0.25 percentage points lower. Say switching would cost $1,200 in one-time fees.
Step | Example calculation | Example result |
|---|---|---|
1. Rate gap on a $400,000 balance | $400,000 × 0.25 percentage points | About $1,000 less interest in year one |
2. Spread across a five-year term | The saving shrinks a little each year as the balance falls | Roughly $4,500 in total |
3. Subtract one-time switching costs | $4,500 minus $1,200 | Roughly $3,300 better off |
4. How long to cover the costs | $1,200 divided by about $1,000 a year | A little over a year |
In this made-up case, switching looks worthwhile because the savings are clearly larger than the costs. If the gap were only 0.05 percentage points, the same method would show the savings barely covering the costs, and staying would make more sense.
Bottom line: The method is always the same: balance times rate gap gives your yearly saving, spread over the term, minus the one-time costs. You can also try your own numbers in our renewal and switch calculator.
What the Price Comparison Does Not Show
Two mortgages with the same rate can still cost you very different amounts over time. These are the features worth checking before you sign either one.
- Prepayment options. How much extra can you pay each year without a charge? If you plan to pay down faster, this can matter more than a small rate difference.
- How an early exit would be charged. If you might sell or move during the new term, ask how the lender works out the penalty. Methods differ a lot between lenders.
- How the mortgage is registered. Some are registered as a standard mortgage, and some as a collateral charge (a registration that can cover more than your loan and is tied to the lender's other products), which can make switching later more costly.
- Whether you can take it with you. Ask if the mortgage can move to a new home if you buy again during the term.
- Your term and your plans. A shorter or longer term can suit your plans better than the default your lender suggests.
We explain the early-exit side in detail in our guide to calculating a mortgage break penalty, and the letter itself in mortgage renewal letters decoded.
How to Decide This Month in 5 Steps
You do not need to become a mortgage expert. You need a few facts and a deadline.
- Find your renewal date and your letter. Federally regulated lenders such as the major banks must send your renewal details at least 21 days before your term ends, so check your mail and online account.
- Ask your lender to improve its offer. The rate on a renewal letter is often not the lowest one available, and asking costs nothing.
- Get at least two other quotes, with switching costs in writing. Ask each lender what it will pay for and what you will pay for.
- Run the comparison. Use the method above with your own balance, rate gap, and term.
- Check the features, then choose before your deadline. If the savings are close, let flexibility and simplicity break the tie.
Starting early helps, because lenders differ in how long they will hold a rate for you. Our guide to how long mortgage rate holds last compares them.
5 Mistakes to Avoid When Choosing Between Renewing and Switching
These mistakes cost homeowners real money, and every one of them can be avoided.
- Signing the renewal letter without asking for a better offer. The first offer is rarely the best one your lender can make.
- Comparing only the rate. A lower rate with higher switching costs or weaker prepayment options can end up costing more.
- Waiting until the last week. Switching takes a few weeks of paperwork, and a rushed decision leaves you with fewer options.
- Forgetting the one-time costs. Legal, discharge, and valuation fees are small individually but they add up, so get them in writing.
- Switching early without checking the penalty. Leaving before your term ends can trigger a charge that wipes out the savings, so wait for the end of your term unless a broker confirms the numbers work.
Useful Resources for Ontario Homeowners
If you are weighing a bigger change than switching, our guide to refinancing versus renewing explains when a refinance fits better. For the full picture of 2026 rule changes, see Canada's 2026 mortgage rule changes.
Ready to compare? Visit our mortgage renewal page or talk to a licensed Ontario mortgage broker.
Frequently Asked Questions: Renewing vs. Switching Your Mortgage
Is it cheaper to renew with my current lender or switch to a new one?
It depends on the size of the rate gap and the one-time costs of switching. Renewing usually costs nothing extra but may carry a less competitive rate. Switching can lower your interest but adds costs such as legal work and a discharge fee. A simple test: multiply your balance by the rate gap, spread it over your term, and subtract the switching costs. If you come out clearly ahead, switching tends to be cheaper.
What does it cost to switch mortgage lenders at renewal?
Typical cost lines are legal and registration work, a discharge fee from your current lender, and sometimes a home valuation. If you switch when your term ends, there is usually no early-exit penalty. Some lenders cover part or all of these costs, but not all do, and offers change. Ask every lender to put their coverage and your expected costs in writing before you decide.
Do I need to pass the stress test to switch lenders?
Often not. Since November 21, 2024, federal rules exempt many uninsured borrowers who switch at renewal from taking a new stress test, as long as the loan amount and repayment period do not increase. Lenders still review your income, credit, and debts. Rules for insured mortgages and some lenders can differ, so ask a broker whether a straight switch applies to your mortgage.
When should I start comparing my renewal options?
As early as you can. Lenders differ in how long they will hold a rate for you, often for a few months, and switching takes a few weeks of paperwork. Federally regulated lenders must also send your renewal details at least 21 days before your term ends. Starting four months ahead is a common rule of thumb, which gives you time to compare offers without feeling rushed.
Can I negotiate with my current lender instead of switching?
Yes, and it is worth trying. The rate on a renewal letter is the lender's standard offer, not always its best. Calling to ask for an improvement, or having a broker do it with competing quotes in hand, can sometimes lead to a better renewal without any switching costs. If your lender will not move, you then have clear numbers for comparing a switch.
Should I use a mortgage broker to compare renewal and switch options?
A broker can compare several lenders at once, ask each to state switching costs, and check whether features such as prepayment options and the exit penalty suit your plans. Many homeowners also use a broker to negotiate with their current lender using real competing quotes. lendsimpl is a licensed mortgage brokerage in Ontario (FSRA #13763), and its licensed professionals can review your renewal letter alongside other offers so you can decide before your deadline.
Disclaimer
This article is for general educational purposes only and should not be taken as financial, legal, or mortgage advice. Mortgage options, rates, approvals, and lender requirements can vary based on borrower profile, property details, credit history, income, equity, documentation, and current market conditions. Speak with a licensed mortgage professional before making a mortgage decision. lendsimpl is a licensed mortgage brokerage in Ontario (FSRA #13763).
Ready to See Which Option Costs You Less?
lendsimpl's licensed Ontario mortgage professionals can compare your renewal offer against other lenders, ask each to state switching costs, and show the results side by side. Approval depends on your income, credit, home value, and each lender's rules.
FSRA-licensed brokerage #13763
Frequently Asked Questions
It depends on the rate gap and the one-time switching costs. Multiply your balance by the rate gap, spread it over your term, and subtract the switching costs. If you are clearly ahead, switching tends to be cheaper. If the gap is small, renewing is often simpler.
Common costs are legal and registration work, a discharge fee from your current lender, and sometimes a home valuation. There is usually no early-exit penalty if you switch when your term ends. Some lenders cover part of these costs, so ask for details in writing.
Often not. Since November 2024, many uninsured borrowers switching at renewal are exempt from a new stress test if the loan amount and repayment period do not increase. Lenders still review income and credit, and rules for insured mortgages can differ.
As early as you can. Lenders differ in how long they hold a rate, and switching takes a few weeks. Federally regulated lenders must send renewal details at least 21 days before your term ends. Starting around four months ahead is a common rule of thumb.
Yes. The renewal letter shows a standard offer, not always the best one. Asking for an improvement, ideally with competing quotes in hand, can sometimes lead to a better renewal without switching costs.
A broker can compare several lenders at once and ask each to state switching costs. lendsimpl is a licensed Ontario mortgage brokerage (FSRA #13763), and its professionals can review your renewal letter alongside other offers.
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Disclaimer:This article is for general educational purposes only and should not be taken as financial, legal, or mortgage advice. Mortgage options, rates, approvals, and lender requirements can vary based on borrower profile, property details, credit history, income, equity, documentation, and current market conditions. Speak with a licensed mortgage professional before making a mortgage decision. lendsimpl is a licensed mortgage brokerage in Ontario (FSRA #13763).
