In 2026, over one million Canadian households will face mortgage renewals, risking an average loss of $13,000. Many homeowners may not realize how straightforward research can lead to significant savings. When renewing, the rate presented by banks is often not the most competitive available.
Understanding Your Mortgage Renewal Options
Many borrowers rush into signing with their banks due to a lack of time or information. Chantal Chevalier, a broker at Orbis Mortgage Group, notes that clients frequently come to her just weeks before their renewal deadline without any notice from their bank. This urgency can lead to inadequate comparisons.
Why You Should Shop Around
When your bank provides a renewal offer, it often serves as a starting point rather than the lowest rate possible. Chevalier explains that banks tend to focus on attracting new clients instead of proactively offering better terms to existing customers. This means that loyalty does not always guarantee the best deal.
Real Cost Implications
To illustrate, consider a triplex purchased in 2021 at a fixed rate of 1.74% with a monthly payment of $1,970. If renewed at a higher rate of 3.94% in 2026, the monthly cost would increase to $2,425, resulting in an additional $5,460 each year.
By negotiating through a mortgage broker and securing a variable rate of 3.35%, one could save approximately $120 monthly or $1,440 annually. According to Ratehub, switching lenders during renewal can yield an average savings of $13,857 compared to automatic renewals.
A Case Study: Strategic Savings
Bernard, a client of Chevalier, encountered a similar situation. Upon shopping around, he discovered an offer substantially better than his bank’s, saving over $10,000 in five years. He was surprised why his bank hadn’t offered this rate initially, leading him to switch lenders.
Fixed vs. Variable Rates: A Strategic Decision
The difference between a fixed rate of 3.94% and a variable rate of 3.35% can translate into around $120 monthly on a $400,000 loan. Some institutions often promote fixed rates due to recent increases driven by geopolitical uncertainties. Although the Bank of Canada currently holds its benchmark rate at 2.25%, market conditions can shift rapidly.
The choice between fixed and variable rates ultimately depends on an individual’s risk profile and time horizon. There’s no one-size-fits-all answer.
Four Steps to Optimize Your Mortgage Renewal
- Start comparing rates 120 days before your renewal deadline. Many lenders allow you to lock in a rate up to four months in advance.
- Ask your bank for their best rate, not just the advertised one. This slight change in language can influence their response.
- Determine if your mortgage is open or closed, as some transfers may incur penalties that negate savings.
- Keep written records of all received offers. This documentation is crucial for negotiations. A competing offer can encourage your bank to match or lower their rate.
By taking these steps, homeowners can effectively save money on their mortgage renewal and avoid falling into common pitfalls. Saving $13,000 can become a reality with careful research and negotiation.
