Renewal Guide

Renewing Your Mortgage in Ontario in 2026? Read This First.

Everything you need to know about requalification, switching lenders, blended rates, and avoiding penalties.

February 15, 2026 6 min read

Mortgage renewal is one of the biggest financial decisions you'll make—but it's also one of the most overlooked. With rates fluctuating and lenders competing for your business, the choices you make at renewal can save—or cost—you tens of thousands of dollars.

Whether your current mortgage is coming up for renewal in 2026 or you're planning ahead, understanding your options is crucial. Here's what every Ontario homeowner needs to know.

Requalification Rules

When your mortgage term comes to an end, your lender will require you to requalify for the new term. This process ensures you still meet their lending criteria.

What Lenders Check in 2026

  • Credit Score: Most lenders require a minimum credit score of 680-720 for the best rates. Your score may have changed since you first got your mortgage.
  • Income Verification: Lenders will verify your current income through pay stubs, T4s, or Notice of Assessment. Self-employed borrowers need 2 years of income history.
  • Debt Service Ratios: GDS (Gross Debt Service) and TDS (Total Debt Service) ratios are calculated using your new rate plus 2% stress test, even at renewal.
  • Property Value: An updated property assessment may be required to ensure the loan-to-value ratio still meets the lender's requirements.

Important: If your income has decreased or your debt has increased, you may not qualify for the same mortgage amount. Start planning 6+ months before your renewal date.

Switching Lenders

Your mortgage doesn't have to stay with your current lender. Renewal time is the perfect opportunity to shop around and potentially secure a better rate.

Benefits of Switching

  • Lower Rates: Different lenders offer different rates. Even a 0.25% difference can save thousands over a new term.
  • Better Terms: You may qualify for features like portable mortgages, collateral charges, or more flexible prepayment options.
  • Improved Service: Some lenders offer better customer service, online tools, or relationship discounts.

The Switching Process

When you switch lenders at renewal, your new lender will typically handle the paperwork. Here's what to expect:

1. Apply to New Lender

Submit your application with income docs, ID, and current mortgage details.

2. Approval & Documents

New lender approves you and prepares new mortgage documents.

3. Legal Transfer

Lawyer handles the transfer of mortgage from old to new lender.

4. Close on New Term

Your new mortgage is officially in place with better terms.

Pro Tip

Start shopping around 120 days before your renewal date. This gives you time to compare offers without feeling rushed.

Blended Rates

A blended rate allows you to combine your existing mortgage balance with new financing at a blended interest rate. This can be a smart option if you want to access equity without breaking your current term.

How Blended Rates Work

When you blend rates, your existing mortgage rate is combined with the new rate for any additional funds. The result is a weighted average that falls between your current rate and the new rate.

Example:

  • • Existing mortgage: $200,000 at 5.50%
  • • New funds requested: $50,000 at 4.75%
  • • Blended rate: ~5.33%
  • • New total mortgage: $250,000 at 5.33%

When Blended Rates Make Sense

  • Home Renovations: You want to renovate but don't want to break your current mortgage term.
  • Debt Consolidation: You have high-interest debt you'd like to consolidate into your mortgage.
  • Avoid Penalties: You want to access equity but want to avoid early termination penalties.
  • Lock In Current Rate: You like your current rate and want to keep it for part of your mortgage.

Consideration: While blended rates are convenient, you might get a better rate by breaking your term and negotiating a new rate. Always compare the math before committing.

Penalty Risks

Breaking your mortgage before the end of your term can result in significant penalties. Understanding how these penalties are calculated is essential before making any changes.

Types of Early Exit Penalties

  • Interest Rate Differential (IRD): The most common penalty. Calculated as the difference between your rate and the lender's current rate, multiplied by your remaining balance and term. Can be tens of thousands of dollars.
  • Three Months' Interest: Some lenders allow you to pay just 3 months of interest instead of IRD. This is usually the cheaper option but still adds up.
  • Legal/Admin Fees: Additional fees for processing the early exit, typically $300-$500.

How to Avoid Penalties

  • Wait Until Renewal: The easiest way to avoid penalties is to make changes at your renewal date when your term naturally ends.
  • Port Your Mortgage: If you're moving, ask if your mortgage is portable. This lets you transfer your current rate to a new property without penalties.
  • Negotiate at Renewal: Your current lender may waive penalties if you're switching to another product with them. Always ask!
  • Prepayment Privileges: Know your terms. Many mortgages allow 10-20% annual prepayment without penalty, which can help you reach renewal faster.

Warning

Never assume a penalty will be small. Get a written penalty quote from your lender before making any decisions. Penalties can easily exceed $10,000 on larger mortgages.

Ready to Optimize Your Mortgage Renewal?

Don't settle for whatever your current lender offers. Get a free Ontario Mortgage Renewal Review and discover your options.

What's Included:

Rate comparison from 30+ lenders
Penalty assessment if breaking early
Blended rate analysis
Switching cost breakdown
Get Your Free Renewal Review

No obligation. Takes about 15 minutes.