Strategy guide

Refinance and renewal

Your renewal is the cheapest chance you'll get to change your mortgage. Here's how to use it, and when breaking early is worth it.

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The renewal letter is a starting point, not the answer

Every few years your mortgage term ends and your lender sends a renewal offer. Most people sign it. That's understandable, but it means skipping the one moment when you can move lenders, change your structure and rethink your mortgage without paying a penalty.

What the renewal letter leaves out

A renewal offer is your current lender's opening position. It rarely shows what other lenders would offer, whether a different term would suit you better, or whether your mortgage could be set up to do more for you. Lenders know most borrowers renew without shopping, and the offer often reflects that.

Signing isn't wrong. Signing without comparing usually is.

Renewal, switch or refinance

These three get mixed up, but they're different. A renewal keeps your mortgage with the same lender for a new term. A switch moves the same balance and amortization to a new lender when your term ends, usually with no penalty. A refinance changes the mortgage itself, most often to borrow more against your home, consolidate debt or change the amortization, and it means qualifying again.

A refinance is generally limited to 80% of your home's value, including your current mortgage and anything you're consolidating.

Switching lenders got easier

Since November 21, 2024, borrowers who switch to a new federally regulated lender at renewal, keeping the same loan amount and amortization, no longer have to pass the mortgage stress test again. Before that, many uninsured borrowers felt stuck with their current lender simply because they couldn't requalify at a higher rate.

That change gives you real bargaining power at renewal. If another lender offers a better rate or a better structure, moving is now far more realistic.

When breaking early makes sense

You don't have to wait for renewal, but leaving early usually costs a penalty. On a variable-rate mortgage it's typically three months' interest. On a fixed rate, it's usually the greater of three months' interest or the interest rate differential, which depends on how rates have moved and on your lender's formula. Some lenders calculate it using posted rates, which can make it much larger.

Breaking early can still come out ahead, for example when it lets you clear high-interest debt, lock in a meaningfully lower rate, or set up a strategy that pays you back over many years. The only way to know is to work out the real penalty and compare it with what you'd save. Mitch can do that for you. The refinance calculator lays that out side by side.

The restructure opportunity

Renewal and refinancing are the cheapest times to change how your mortgage is built, not just its rate. That's when a regular mortgage can become a readvanceable one, which is the foundation for the Smith Manoeuvre, Rental Cash Damming and portfolio scaling. It's also the moment to choose a term length, prepayment privileges and portability that fit where your life is heading.

The walk-through

Renewing or refinancing, step by step

Most of the value comes from starting early. Here's how it runs from the first look to the day it closes.

Four to six months out
Start before the letter arrives

Many lenders will hold a rate for up to about four months, so starting early lets you lock something in while you compare. Waiting for the renewal letter leaves you with less time and fewer options.
Getting ready
Gather your numbers

Your balance, your rate, your maturity date and your home's rough value. If you're thinking about breaking early, Mitch can work out your exact penalty.
Comparing
Look at structure, not just rate

Compare offers on rate, term, prepayment privileges and penalties. The cheapest rate on a mortgage that can't do what you need isn't the best deal.
Deciding
Renew, switch or refinance

Renew if your lender's offer is genuinely competitive. Switch if another lender is better and your balance stays the same. Refinance if you want to borrow more, consolidate or restructure, and the numbers still work after the costs.
Approval
Paperwork and appraisal

A switch usually needs updated documents. A refinance means a full application and often an appraisal. Your new lender and lawyer handle the payout of the old mortgage.
After closing
Keep watching

Rates move during your term. Knowing your penalty, your prepayment room and your next maturity date means you're ready when an opportunity, or a problem, shows up.

Common mistakes

Signing without comparing. The renewal letter is an opening offer, not a final one.
Starting too late. Begin four to six months out so you can switch or hold a rate.
Breaking early without knowing the real penalty. Have Mitch work it out first.

Is it time to look?

A quick review costs nothing. Mitch will tell you honestly if renewing with your current lender is the right call.

Worth a look

You're carrying credit card or other high-interest debt
Rates have moved meaningfully since you signed
You need more room in your monthly cash flow

Probably not yet

You're mid-term with a large fixed-rate penalty and no debt to clear
You plan to sell your home soon
Your current mortgage already fits your plans

Refinance and renewal questions

Every lender's rules are a little different. These are the questions Mitch gets most.

Can I switch lenders at renewal without a penalty?

Usually, yes. When your term ends you can move to another lender, and since November 2024 a straight switch to a federally regulated lender, with the same balance and amortization, doesn't require passing the stress test again.

How much does it cost to break my mortgage early?

On a variable rate it's typically three months' interest. On a fixed rate it's usually the greater of three months' interest or the interest rate differential. Mitch can work out the exact figure for you.

How much can I borrow when I refinance?

Generally up to 80% of your home's value, including your current mortgage and anything you're consolidating.

When should I start looking at my renewal?

Four to six months before your term ends. That gives you time to compare offers and hold a rate.

Is renewal a good time to set up a strategy?

Often the best time. Changing the structure, like moving to a readvanceable mortgage, is usually cheapest when your term ends, because there's no penalty to break.

Renewing soon? Get a second look.

Tell Mitch when your term ends and what you want your mortgage to do. He'll compare your options and tell you honestly whether to renew, switch or restructure.

Work with Mitch Run the refinance calculator