Renewing your mortgage: should you stay or switch?

What changed on November 21, 2024?

Canada's banking regulator removed the mortgage stress test for straight lender switches at renewal.

Before this change, if you wanted to move your mortgage to a new lender at renewal, you often had to requalify at the stress-test rate — roughly two percentage points above your actual rate. That extra hurdle kept a lot of people stuck with whatever their existing lender offered.

OSFI ended that for straight switches of uninsured mortgages, effective November 21, 2024. Insured mortgages (those with less than 20% down) were already exempt. The practical result: it's now much easier to shop your renewal around, which is exactly what lenders were counting on you not doing.

Should I renew with my current lender or switch?

Get at least one competing quote first — a lender's opening renewal offer is rarely its best rate.

Your current lender knows that most people sign the renewal letter that arrives in the mail without shopping. That letter is a starting point, not a floor. The real decision is whether switching saves you enough to clear the costs of moving.

Weigh the rate gap against switch costs, prepayment privileges, penalties, and how long you plan to keep the property. That last point is where a second opinion from someone who also knows the real estate side helps.

How much does a small rate difference actually save?

More than most people expect — a rate just 0.2% lower is real money over a term.

Here's what a rate 0.2% lower than your renewal offer is worth at a few common balances, on a 25-year amortization. The figures barely move whether rates sit near 4% or near 6%:

A quick rule of thumb: the interest you save in a year is about your balance times 0.2% — so roughly $1,000 a year on a $500,000 mortgage.

The honest caveat: these are illustrative figures, and switch costs — such as a discharge fee — come off the top. So the real test isn't the headline number, it's whether the savings clear those costs. On a straight switch they often do, and many lenders cover most of the switch costs to win your business. That's the math I run for you before you decide.

Does the stress test still apply to me?

For a straight switch, generally no. For a refinance, yes.

If you're moving to a new lender with the same balance and the same or a shorter amortization, the stress test generally no longer applies. If you're refinancing — borrowing more money or stretching your amortization — the stress test still applies.

Either way, you still have to meet the new lender's income and credit requirements. The difference is you qualify at your contract rate now, not the higher stress-test rate, which opens the door for a lot more people.

What does a "straight switch" actually mean?

Same mortgage, new lender — no new money.

A straight switch moves your existing mortgage to a different lender without increasing the loan amount and without extending the amortization. Because you're not borrowing anything extra, it's treated differently from a refinance — and that's why it escapes the stress test under the 2024 rule. If you want to pull equity out or consolidate debt, that's a refinance, and different rules apply.