The 120-Day Mortgage Renewal Countdown, Week by Week

Renewal is the one day in a mortgage when you can walk away from your lender without paying a prepayment penalty. That leverage lasts exactly as long as your term does, and most borrowers discover it two weeks before it expires. Federally regulated lenders are required to send a renewal statement only 21 days before the end of the term. Twenty-one days is not enough time to get competing approvals, so the useful clock starts about 120 days out.

The stakes are unusually high this cycle. Bank of Canada staff estimate that roughly 60 per cent of mortgage holders renewing in 2025 and 2026 face a payment increase, and that borrowers rolling off a five-year fixed contract average 15 to 20 per cent higher payments. A shopped renewal will not erase that, but it decides how much of the increase you keep.

Why the countdown starts at 120 days

Most Canadian lenders will hold a quoted rate for 90 to 120 days. That hold is the entire mechanism behind a well-run renewal. Lock a rate early and you have created a floor: if rates fall you take the lower number, and if rates rise you keep the held one. Starting at 120 days is simply the earliest point at which the market will make you a binding promise.

FCAC puts it flatly and says to start shopping a few months before the term ends rather than waiting for the renewal letter. Its own research suggests most people do not. Of Canadian mortgage holders surveyed, 20 per cent never compared lenders at all, 37 per cent picked their lender mainly because they already banked there, and 13 per cent did not know the rate was negotiable.

The straight switch rule that removed the stress test

For years the stress test punished borrowers who wanted to leave. Staying put required no requalification, while moving to a cheaper lender meant proving you could afford a rate you were not being charged. Two changes in late 2024 closed that gap. The Office of the Superintendent of Financial Institutions waived the minimum qualifying rate on straight switches of uninsured mortgages on November 21, 2024, and the Department of Finance matched it for low-ratio insured mortgages on December 16, 2024.

The Department of Finance conditions are specific, and it is worth checking each one before you assume you qualify.

• The mortgage was originated at a federally regulated financial institution and was already assessed against the minimum qualifying rate.
• You are renewing with a new lender rather than refinancing with your current one.
• You keep the existing contractual amortization schedule.
• Your unpaid principal may rise by up to $3,000 to cover transaction costs such as penalties or fees. Taking equity out is not permitted.

Adding $20,000 of credit card debt to the balance, or stretching the amortization back out to 30 years, turns a straight switch into a refinance. At that point the stress test returns and your options narrow considerably.

What a collateral charge does to the timeline

A mortgage registered as a collateral charge can secure more than the mortgage itself. Car loans and lines of credit are often attached to the same registration. To move that mortgage you must repay in full or transfer every loan secured by the charge, then pay to remove the old registration and register the new one.

None of that is a reason to stay. It is a reason to know early, because it adds both cost and weeks. FCAC advises allowing a few months before the renewal date specifically so that how your mortgage is registered does not decide the outcome by default. Your lender, lawyer or notary can tell you which type you have in a single phone call.

The costs of switching, and who pays them

A switch is rarely free, but the fees are smaller than most people assume and are frequently absorbed by the incoming lender. Ask directly whether they will cover them, because the answer is often yes and almost never volunteered.

If your mortgage is already insured, tell the new lender and ask your existing lender for the insurance certificate number. That is what stops you from paying a premium a second time on a loan that is already covered.

Three things to check in the renewal offer itself

• Whether it renews automatically. A renewal statement must say so if the lender plans to renew you automatically. That sentence is the difference between an offer and a default outcome.
• Whether the rate is their retention rate. FCAC states that you may qualify for a discounted rate lower than the one quoted in the renewal letter. Tell your lender about competing offers and be ready to show them.
• Whether the term still fits. Renewal is the free moment to change payment frequency, shorten the amortization, or pick a term length that lines up with a move or a career change. Once the new term starts, changing it costs a penalty.

Banks are also required to offer products appropriate to your circumstances and to tell you when they have assessed that a product is not appropriate for you. Describing your actual situation, including plans to sell or a change in income, is what makes that obligation useful rather than theoretical. For the wider picture on where rates have been sitting this year, see the current Canadian mortgage rate outlook.

If you are renewing into a payment you cannot carry

Start the conversation early rather than at day 21. A lender has more options available before maturity than after, and FCAC's mortgage relief guidance sets expectations for how federally regulated institutions handle borrowers in difficulty. Bring a current budget. The realistic levers are a longer amortization at higher lifetime cost, a temporary payment change, or a different product entirely.

If the numbers do not work at any rate you can get, that is worth knowing four months out rather than four weeks out, while selling is still an unhurried decision. Our guides on what income a Canadian home actually requires and whether buying still makes sense at your income walk through the same arithmetic from the other direction.

Credit matters more at renewal than most borrowers expect, because a switch means a new approval. If your score has slipped since you first qualified, the mechanics of Canadian credit scores explain what moves fastest in a four-month window. And if this is your first renewal, the full home-buying sequence covers the terminology the paperwork assumes you already know.