Switching lenders at renewal can unlock a better rate, but it isn’t automatic or free of friction. There’s a new application, some paperwork, and sometimes a small amount of legal or appraisal cost. The good news: switching at maturity doesn’t come with a prepayment penalty, and a straight switch no longer requires you to pass the mortgage stress test.
The right call usually comes down to how much the rate difference actually saves you versus how easy your file is to move. Here’s a simple way to compare the two paths.
What counts as a “straight switch”
A straight switch means moving your existing mortgage to a new lender at renewal without changing the key terms. Since November 2024, federally regulated lenders don’t have to apply the stress test to straight switches of uninsured mortgages, and insured mortgages have been exempt for longer. To qualify as a straight switch:
- The mortgage amount can’t increase (beyond small allowances for transfer costs).
- The amortization can’t be extended beyond your current schedule.
- The property and borrowers generally stay the same.
If you want to borrow more, stretch the amortization or add a line of credit, it becomes a refinance, and full qualification applies.
The costs of switching
Typical switching costs
| Cost | Typical range | Who often pays |
|---|---|---|
| Discharge fee (old lender) | About $200 to $500 | You, though some new lenders reimburse it |
| Legal or title work | $0 to $1,000 | Often covered by the new lender for switches |
| Appraisal | $300 to $600 if required | Often covered by the new lender |
| Collateral charge removal | Extra legal and registration costs | You, unless covered |
How much can a lower rate save?
Take a $450,000 balance with 20 years remaining, renewing for five years. If your current lender offers 4.69%, here is roughly what a lower rate elsewhere would save in interest over the five-year term:
5-year interest savings on $450,000 by rate difference
Most switching costs are one-time and in the hundreds of dollars, while the savings compound over the full term. On a large balance, a difference of 0.10% or more usually covers the cost, especially if the new lender pays for legal and appraisal.
A simple decision framework
Should you switch?
Get your lender’s best offer
Ask your current lender for its best renewal rate, not just the letter rate.
Get one or two outside quotes
Use a broker or another lender, and ask what costs they cover for a switch.
Do the math over the term
Estimate interest saved over the full term, minus any costs you’d pay yourself.
Compare the fine print
Check prepayment privileges, penalty calculation and portability, not just the rate.
Give your lender a chance to match
A credible competing offer often gets you a better retention rate.
Decide early
A switch takes a few weeks, so start at least 60 to 90 days before maturity.
When staying put makes sense
- The rate difference is tiny and the new lender won’t cover costs.
- You have a collateral charge that would be expensive to discharge.
- Your income or credit has changed and a new approval is uncertain.
- You plan to sell or refinance soon, and your current lender has better portability or penalty terms.
When switching usually makes sense
- The rate difference is meaningful and costs are covered.
- You’re unhappy with your lender’s service, flexibility or penalty terms.
- A new lender offers better prepayment privileges that you’ll actually use.
- Your current lender won’t negotiate.
Examples use illustrative rates and Canadian semi-annual compounding, and are rounded. They are not rate quotes or advice. Last reviewed September 2026.