Quick Answer: When Your Bank Sends the Renewal Letter
- Federally regulated lenders in Canada must send a mortgage renewal letter at least 21 days before the end of your current term.
- The letter typically includes your new interest rate, remaining balance, new term options, payment amount, and prepayment privileges — or a statement that the lender will not renew.
- Most banks actually send the first renewal offer 90 to 120 days before maturity to encourage early signing.
- Receiving the letter does not obligate you to accept the offer; you may negotiate, switch lenders, or refinance.
- If you do nothing by maturity, most lenders auto-renew into a short, often higher-rate open or convertible term.
Why This Letter Matters More Than You Think
A mortgage renewal letter is the single most important piece of mail your lender sends during a five-year cycle — and most Canadians treat it like a utility bill. They skim it, sign the first page, and send it back.
That one habit can cost tens of thousands of dollars. The rate on the first page is almost never the best rate your lender can offer, and it is often well above what a competitor would offer to win your business. Renewal is also the one moment in the cycle where you can switch lenders without a prepayment penalty. For more on how brokers add value at that moment, see why work with a mortgage broker.
Quick Start: Pick Your Renewal Path
Fastest and simplest. Sign the lender's offer, ideally after negotiating. Best when the renewal rate is already competitive and nothing about your mortgage needs to change.
Most common path to real savings. A new lender covers the straight-switch paperwork, and in most cases you can skip re-qualifying under the stress test. Start with an Instant Pre-Approval.
The 21-Day Rule: What Federally Regulated Lenders Must Send
The 21-day minimum is a floor, not a target. Most banks send the first offer much earlier — typically 90 to 120 days before maturity — because the longer you hold the offer, the more likely you are to sign without shopping around.
If your lender declines to renew, the same 21-day minimum applies, so you have time to arrange financing elsewhere. Credit unions regulated at the provincial level are not bound by the FCAC rule, so the notice window may differ. If you are unsure which category your lender falls into, our FAQ page can help.
What a Mortgage Renewal Letter Actually Looks Like
A typical renewal letter is one to three pages long and contains a predictable set of fields.
- Remaining principal balance — what you still owe on maturity day. This is the number that gets re-financed into the new term.
- Offered interest rate(s) — usually a short menu of terms. The first number is almost always a posted rate, meaning the lender's advertised rate before any discount.
- New payment amount — what you would pay monthly, bi-weekly, or weekly under each term option.
- Prepayment privileges — how much you may pay down each year without penalty (often 10% to 20% of the original balance).
- Response deadline — the date by which you must sign to accept the offered rate. If you miss it, the lender typically moves you to a short open or convertible term at a higher rate.
Every one of those fields is negotiable or shoppable. A posted rate is the lender's sticker price. A discounted rate is what they actually offer when you push back or when they are matching a competitor. Our mortgage glossary defines each term in plain English.
Renewing In Place vs. Switching Lenders at Renewal
On a $500,000 mortgage, a 0.25% rate difference typically works out to roughly $1,250 of extra interest per year — or $6,250 over a five-year term. Current benchmarks are on our rate details page.
In Quebec, switching lenders at renewal requires a notarial act for the new charge, which adds a step. A broker can tell you whether the rate savings outweigh that extra friction.
Your 120 / 90 / 30-Day Renewal Roadmap
The best renewal outcomes come from treating the window like a project with milestones, not a last-minute decision.
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1
At 120 days out Pull your mortgage statement and note three numbers: remaining balance, current interest rate, and maturity date. Benchmark your rate against the market — if it is more than 50 basis points above what a broker can show you, you have real leverage.
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2
At 90 days out Request a rate hold from a broker or new lender. A hold typically protects you for 90 to 120 days: if rates rise, you keep the lower rate; if they drop, you get the lower one. Pre-approvals and holds are free and non-binding.
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3
At 60 days out Your current lender's formal renewal letter should arrive. Compare it against your held rate and ask your lender to match or beat it. Either way, you now have real negotiating leverage. To formalize a switch, start our online application.
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4
At 30 days out Final decision point. If you are renewing in place, sign the matched rate. If switching, the new lender handles discharge paperwork and funding on maturity day.
What Happens If You Ignore the Renewal Letter
The rollover is the lender's safety net to keep your mortgage active — not a penalty. But every day in that higher-rate term is money you did not need to spend. Our mortgage payment calculator can show the difference on your balance.
Common Mistakes Canadians Make at Renewal
Most renewal errors are small habits that quietly cost the most.
- Signing the first offer. Banks lead with their posted rate, not their best rate. A single phone call often moves it.
- Waiting until the 21-day deadline. By then your leverage is gone. Start the shop-around at 120 days.
- Skipping the prepayment-privilege section. Prepayment flexibility is quietly reset with each new term and can be worth more than a few basis points of rate.
- Assuming you must re-pass the stress test. You typically do not need to re-qualify when staying with your current federally regulated lender.
- Letting the mortgage auto-renew. Rollover rates are among the highest the lender offers.
- Ignoring the amortization lever. Renewal is a cost-free moment to shorten your amortization and reduce lifetime interest.
- Thinking a broker switch is paperwork-heavy. A straight switch at renewal is usually covered by the new lender — your out-of-pocket cost is often zero.
If debt has built up during the term, renewal can also be the right moment to look at debt consolidation — rolling higher-interest balances into a single, lower-rate mortgage payment.
Frequently Asked Questions
When exactly will my bank send me a mortgage renewal letter?
Does my mortgage automatically renew if I ignore the letter?
Can I negotiate the rate on the renewal offer my bank sent?
Do I have to re-qualify for the stress test if I renew with the same lender?
What is the difference between a renewal and a refinance?
How early can I lock in a new rate before my current term ends?
What happens to my CMHC insurance if I switch lenders at renewal?
Is there a fee to switch lenders when my mortgage renews?
Make Your Renewal Letter Work For You
A broker can benchmark your current renewal offer against what the full market is quoting today — at no cost to you. Guidance from Razi Khan, Founder and Mortgage Broker at Pegasus and the team, drawing on 20+ years of shopping Canadian lenders on behalf of borrowers.
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About the author
Razi Khan
Founder, CEO & Licensed Mortgage Broker · Pegasus Mortgage Lending · Toronto, Ontario · FSRA Lic # 11479
Razi Khan is the Founder, CEO, and a licensed Mortgage Broker at Pegasus Mortgage Lending Center Inc., based in Toronto. With over 20 years of experience in the Canadian mortgage industry, Razi has personally guided more than 3,000 clients through some of the most complex and high-stakes financial decisions of their lives — from first-time purchases in the GTA to refinancing strategies, alternative lending solutions, and cross-border mortgages for Canadians buying in the United States.
Razi founded Pegasus in October 2008, launching the brokerage at the height of a global financial crisis. He works across the full spectrum of borrower profiles, with particular expertise in complex files including self-employed borrowers, credit-challenged clients, and investors building multi-property portfolios.
Learn more about Razi Khan →Sources & References
- Financial Consumer Agency of Canada (FCAC) — Renewing your mortgage: canada.ca/en/financial-consumer-agency/services/mortgages/renew-mortgage.html
- Office of the Superintendent of Financial Institutions (OSFI) — Guideline B-20: osfi-bsif.gc.ca Guideline B-20
- Canada Mortgage and Housing Corporation (CMHC): cmhc-schl.gc.ca
- Financial Services Regulatory Authority of Ontario (FSRA) — Mortgage brokering: fsrao.ca/consumers/mortgage-brokering