What a mortgage renewal letter contains
In Canada, lenders are required to send a renewal letter at least 210 days (about 7 months) before the mortgage term expires. The letter typically includes the following sections:
| Section | What it means |
|---|---|
| Current balance & amortization | How much you owe and how many years remain to pay off the mortgage |
| Interest rate | The rate the lender is offering for the new term — may be higher or lower than your current rate |
| Term length | How long the new rate is locked in (e.g., 1, 2, 3, 4, or 5 years) |
| Payment amount | Your new scheduled payment — may be different from your current payment |
| Prepayment privileges | How much extra you can pay annually (e.g., 15% of balance, 100% lump sum) |
| Prepayment penalty | What you pay if you switch lenders before the new term ends — critical if you plan to switch |
| Renewal deadline | The date by which you must accept or the lender may auto-renew at a higher rate |
| Fixed vs variable | Whether the offered rate is fixed (stable) or variable (moves with prime) |
How the current rate environment affects your renewal letter
As of September 10, 2026, the Bank of Canada held its overnight target rate at 2.25% (announced September 2, 2026), with the next decision scheduled for October 28, 2026. The 5-year Government of Canada benchmark bond yield moved from 3.40% to 3.42% in early September 2026, which influences fixed mortgage pricing.
This means your renewal letter rate may differ from rates available on the open market. For example, Ratehub's September 9, 2026 snapshot showed the best high-ratio 5-year fixed at 4.09% and the best 5-year variable at 3.3%. WOWA's September 8 snapshot showed 5-year fixed at 3.94% and 5-year variable at 3.30%. Your bank's renewal offer may be higher or lower depending on your credit profile, lender, and location.
Step-by-step: reading your renewal letter
- Find the offered rate and term. Check whether it is fixed or variable, and for how many years.
- Check the payment amount. Compare it to your current payment. If it is higher, calculate the difference over the full term.
- Read the prepayment privileges. Note the percentage of extra principal you can pay annually and any lump-sum allowances.
- Find the prepayment penalty. This is listed if you switch lenders or break the term early. For fixed rates, it is typically the greater of 3 months' interest or the IRD. For variable rates, it is usually 3 months' interest.
- Note the renewal deadline. Missing the deadline may result in automatic renewal at a less favourable rate.
- Compare to current market rates. Use current Canadian mortgage rates on RateShop to see what other lenders are offering for the same term and mortgage type.
- Model the numbers. Use the mortgage payment calculator to compare your renewal letter payment against alternative rates and terms.
- Decide: stay, switch, or negotiate. If the market rate is lower, contact the new lender first to get a binding offer — then decide whether to switch or ask your current lender to match.
What to compare before signing
| Factor | What to check on your renewal letter | What to compare |
|---|---|---|
| Interest rate | Offered rate, fixed or variable | Current market rates for same term and type |
| Payment | New monthly payment amount | Payment at alternative rates using the mortgage payment calculator |
| Prepayment privileges | Extra payment %, lump sum allowance | Competitor prepayment privileges |
| Prepayment penalty | IRD or 3-month interest amount | Whether savings exceed the penalty |
| Term length | 1, 2, 3, 4, or 5 years | Shorter terms may offer lower rates; longer terms offer stability |
| Features | Rate hold, portability, collateral charge | Competitor features and flexibility |
When to switch lenders at renewal
Switching lenders at renewal can save money, but only if the savings outweigh the costs. Consider switching if:
- The market rate is meaningfully lower than your renewal offer (e.g., 0.50%+ savings)
- Your current lender's prepayment penalty is low or the term has expired
- You want different features (e.g., more prepayment flexibility, a shorter term, or a variable rate)
- Your financial situation has improved (better credit, lower debt, higher income) and you qualify for better pricing
Be cautious about switching if: the prepayment penalty is large relative to rate savings, you are close to paying off the mortgage, or you value convenience over potential savings. Always run the numbers first.
September 2026 renewal letter snapshot
| Mortgage type | Best market rate (Sept 9) | Typical renewal offer | Note |
|---|---|---|---|
| High-ratio 5-yr fixed | 4.09% (Ratehub) | Varies by lender | Insured; CMHC premium applies |
| Uninsured 5-yr fixed | ~4.35%+ (market) | Varies by lender | 20%+ down payment |
| 5-yr variable | 3.30% (Ratehub/WOWA) | Varies by lender | Prime - 0.15% to 0.50% typical |
| 3-yr fixed | 3.89% (WOWA) | Varies by lender | Shorter term; lower rate, less stability |
Market rates from Ratehub.ca (Sept 9, 2026) and WOWA.ca (Sept 8, 2026). Your actual renewal offer depends on lender, credit profile, verified income, property value, and mortgage terms. Not offers or guarantees.
Compare your renewal offer with current rates
Before you sign, see what current market rates look like for your mortgage type and term. RateShop can help you compare your bank's renewal offer against broker and monoline lender rates in minutes.
Compare mortgage rates nowRate disclaimer
All rates, yields, and market figures on this page are general educational information gathered from public sources on or about September 10, 2026 and may be out of date, incomplete, or superseded without notice. RateShop does not guarantee any rate, approval, or product availability. Actual mortgage rates depend on lender criteria, credit profile, verified income, property type and value, mortgage purpose, down payment or equity, insurance status, amortization, and documentation. The Bank of Canada's target overnight rate (2.25% as of September 2, 2026), Government of Canada bond yields (5-year 3.42% on latest data), the next policy decision date (October 28, 2026), and the BOC posted 5-year benchmark rate (3.42%) reflect public information available at the time of writing and may change. Prepayment penalties vary by lender and mortgage contract — confirm the exact amount with your lender. This article does not provide personalized mortgage, legal, tax, or financial advice, and does not guarantee approval or a specific rate. Always confirm current terms with your lender or a qualified professional.
Frequently asked questions
What information is in a mortgage renewal letter?
A typical renewal letter includes: the current balance, interest rate, term length, payment amount, amortization remaining, prepayment privileges, prepayment penalty (if you switch), renewal deadline, and whether the rate is fixed or variable. Compare each line against current market rates and your budget before signing.
Should I accept my bank's renewal offer without comparing?
Not necessarily. The first renewal offer may be convenient, but many borrowers save money by comparing to broker, monoline, and other lender rates. Switching lenders at renewal can reduce your rate and total interest — but check the prepayment penalty first to see if savings outweigh the cost.
What is the prepayment penalty for switching lenders at renewal?
For a fixed-rate mortgage, the penalty is typically the greater of 3 months' interest or the IRD (interest rate differential). For a variable-rate mortgage, it is usually 3 months' interest. Your renewal letter should state the exact penalty amount. Use the mortgage payment calculator on RateShop to model whether rate savings exceed the penalty.
Does the Bank of Canada rate hold affect my renewal letter rate?
The Bank of Canada held its overnight rate at 2.25% on September 2, 2026, with the next decision on October 28, 2026. This keeps variable rates stable for now, but fixed rates follow bond yields — the 5-year benchmark yield moved from 3.40% to 3.42% in early September 2026. Your renewal letter rate reflects the lender's current pricing, which may differ from the BOC rate.
What if I can't afford the payment on my renewal letter?
If your renewal payment is higher than you can afford, contact your lender before the renewal date. Options may include extending the amortization, switching to a variable rate, or exploring a payment break (if available). Switching lenders may also give you a lower rate or different term. Use the mortgage payment calculator to model scenarios before deciding.
Sources used
- Bank of Canada: Selected benchmark bond yields (5-year 3.42% latest, Sept 10, 2026)
- Bank of Canada: Bank of Canada maintains the policy rate at 2¼% (September 2, 2026)
- Bank of Canada: Policy interest rate (2.25% held; next decision October 28, 2026)
- Ratehub.ca: Best mortgage rates in Canada (September 9, 2026: high-ratio 5-yr fixed 4.09%, 5-yr variable 3.3%)
- WOWA.ca: Lowest mortgage rates in Canada (September 8, 2026: 5-yr fixed 3.94%, 3-yr fixed 3.89%, 5-yr variable 3.30%)
- Statistics Canada: Consumer Price Index (July 2026, headline ~3%)
- CMHC: Residential Mortgage Industry Report, Spring 2026 (renewal-rate-shock outlook)
- Bank of Canada: How will mortgage payments change at renewal? (staff analytical note 2025-21)