What Happens If You Just Sign Your Mortgage Renewal Letter?

Published 2025-03-15 · Updated 2025-06-01 · Reviewed against guidance from FSRA-licensed brokers

What happens if I just sign my mortgage renewal letter without negotiating?

You’ll almost certainly pay more than you need to. Lenders’ initial renewal offers are typically 0.15% to 0.40% above the rate you could negotiate, costing $1,000 to $4,000+ over a five-year term on a typical Ontario mortgage. According to the Financial Consumer Agency of Canada, you have the right to negotiate or switch lenders at renewal, and doing so is one of the most impactful financial decisions you can make as a homeowner.

Why lenders offer high renewal rates

Your lender knows that most borrowers sign without shopping around. Industry data suggests that the majority of Canadian homeowners simply sign their renewal letter. Lenders count on this inertia. The initial offer is priced with a margin built in for negotiation.

The real cost of auto-renewing

Consider a $400,000 mortgage balance:

• At the renewal-letter rate. If your lender offers, say, a rate that’s 0.30% above the best available market rate, you’d pay approximately $6,000 more in interest over a 5-year term.
• On a $600,000 balance. That same rate gap costs roughly $9,000 over 5 years.

These are ranges for illustration. Your actual savings depend on your balance, the rate differential, and your term length.

What you should do instead

1. Don’t panic or rush. You have time. Start shopping at least 120 days before your renewal date.
2. Get a competing quote. Even one other offer gives you negotiating leverage.
3. Call your lender’s retention department. Not the branch, not the 1-800 number. The retention team. They have authority to offer lower rates.
4. Consider a broker. A licensed mortgage broker shops 30+ lenders for you at no cost. They’re paid by the lender, not by you.

What if your renewal date already passed?

If you’ve already signed, check whether your agreement includes a rate-hold period or if it’s already locked. If you signed but haven’t yet passed the renewal date, contact your lender immediately. Some allow changes. For future terms, set a calendar reminder for 120 days before your next renewal.

If you let your renewal date pass without signing anything, your mortgage typically converts to an open mortgage at the lender’s posted rate, which is usually higher. Contact your lender or a broker immediately to lock in a competitive rate.

Figures shown are indicative and for general information only, subject to qualification and lender approval, OAC. Not a quote. A licensed mortgage broker provides your personalized quote.

Sources

• FCAC — Mortgage renewal rights
• Bank of Canada — Benchmark rate history