What happens at the end of a mortgage term
Most Canadian residential mortgages are not repaid over a single contract. A borrower may have a 25-year amortization but a mortgage term of only three or five years.
At the end of the term, the remaining balance reaches maturity under the existing contract. The borrower must then:
Renew with the existing lender
Replace the mortgage with another lender
Refinance or materially restructure it
Pay the balance in full
Enter another short-term arrangement if no longer-term solution is available
A renewal is the agreement establishing the rate, term, payment and other conditions that will apply after the existing term ends. Maturity and renewal are therefore related but not identical: maturity is the end of the present contract; renewal is one possible way to deal with the outstanding balance.
Federal consumer guidance similarly explains that a borrower must renew or repay the balance at the end of each term and will usually require several terms to complete the full amortization.
Classification: Federal consumer guidance.
Source: Financial Consumer Agency of Canada.
Page updated: October 15, 2025.
Material qualification: Renewal rights and procedures also depend on the mortgage contract and lender.
The renewal statement
Where the mortgage is held by a federally regulated financial institution, such as a bank or federal credit union, the lender must provide a renewal statement at least 21 days before the end of the term. The lender must also provide at least 21 days’ notice if it does not intend to renew.
The renewal statement must disclose information including:
Remaining principal
Offered interest rate
Payment frequency
Proposed term
Applicable charges or fees
The offered rate cannot be increased between the renewal statement and the renewal date.
Classification: Federal consumer-protection requirement applying to federally regulated financial institutions.
Source: Financial Consumer Agency of Canada.
Page updated: October 15, 2025.
Material qualification: The federal 21-day requirement should not be represented as the governing notice rule for every provincially regulated lender or private mortgage.
Why the renewal offer should not be accepted automatically
A renewal offer is convenient because the existing lender already knows the property and payment history. Convenience does not prove that the proposed rate, term or conditions are competitive or suitable.
The lender’s first renewal offer may not reflect:
The best rate the lender is prepared to offer
Better pricing available through another lender
The borrower’s improved income or credit
A shorter or more flexible term
A better prepayment structure
The borrower’s plan to move, sell or refinance
The opportunity to reduce the amortization
The need to consolidate or restructure debt
FCAC recommends shopping several months before maturity and negotiating with the current lender. It also warns that, where the contract permits automatic renewal, inaction may lead to a mortgage that does not offer the best rate or conditions. The renewal statement should identify whether the lender plans to renew automatically.
Automatic renewal prevents an immediate maturity problem, but it can also place the borrower into an unsuitable rate, term or open-mortgage structure. The automatic-renewal terms must be read rather than assumed.
Five different renewal-period decisions
| Option | What happens | Typical underwriting treatment | Main issue to assess |
|---|---|---|---|
| Renew with current lender | Existing lender issues a new term for the remaining balance | May be completed without a full new application where the account remains acceptable, but lender policy controls | Offered rate, term, payment and suitability |
| Straight switch | Remaining balance moves to a new lender without equity takeout or material restructuring | New lender must approve the transaction; special stress-test treatment may apply if all conditions are met | Qualification, costs and property acceptance |
| Refinance | Mortgage amount, borrowers, amortization, secured debts or purpose changes materially | Full underwriting and current property valuation are generally required | Total cost, penalty, equity and affordability |
| Extend amortization | Repayment is spread over a longer period | May require lender approval or refinance treatment | Lower payment but slower repayment and greater interest |
| Short-term rescue financing | Alternative or private loan pays out or temporarily replaces the maturing mortgage | Greater focus on property, equity, repayment capacity and exit | Cost and credible path out of the short-term loan |
The correct label matters because a borrower asking to “renew” may actually need a refinance. For example, increasing the mortgage to pay credit cards is not a simple renewal merely because it occurs at maturity.
Negotiating with the current lender
A borrower can ask the existing lender to reconsider:
Interest rate
Fixed or variable structure
Term
Payment frequency
Amortization
Prepayment privileges
Portability
Product restrictions
Evidence of a competing offer may improve the negotiation, although the lender is not required to match it.
The comparison should use the complete mortgage—not only the rate. A slightly lower rate may be less valuable if it comes with a restrictive penalty formula or an unsuitable term.
Does a borrower need to requalify?
Subsection — Renewal with the existing lender
Many lenders renew a mortgage in good standing without conducting the same full underwriting required for a new mortgage application. That is a common lender practice, not a universal legal right.
The existing lender may still review or act upon:
Payment history
Arrears
Breach of mortgage terms
Property-insurance concerns
Material property damage
Fraud or misrepresentation
Other secured debts
Lender risk appetite
A borrower whose income or credit has deteriorated may therefore find renewal with the existing lender easier than moving, but renewal cannot be assumed.
Subsection — Renewal through a new lender
A new lender generally performs its own underwriting, which may include:
Credit review
Income verification
Debt-service assessment
Property review
Appraisal or automated valuation
Title and mortgage registration review
Confirmation of the remaining amortization
Insurer review where applicable
Current federal relief from the prescribed stress-test rate for qualifying straight switches does not eliminate the new lender’s credit decision. That distinction is explained in Chapter 24.
Insured and uninsured mortgage renewal
Mortgage default insurance does not ordinarily expire simply because the mortgage term ends.
When an insured mortgage is renewed with the existing lender, a new borrower-paid premium is not ordinarily charged merely because a new term begins.
When moving an insured mortgage to another lender, the borrower should provide the existing insurance certificate information. FCAC notes that the certificate may help avoid a duplicate premium. Increasing the mortgage amount or extending the amortization may create new insurance treatment, premium requirements or refinance classification.
Classification: Federal consumer guidance plus insurer- and lender-specific implementation.
Material qualification: Portability, premium credits and continued insurance eligibility depend on the applicable insurer, lender and transaction.
Renewal when circumstances have deteriorated
Subsection — Income has declined
The existing lender may still offer a renewal, particularly where payments are current. A new lender may require current income to support the mortgage under its policy.
Possible options include:
Renewing with the current lender
Reducing the balance using savings or sale proceeds
Extending amortization where available and suitable
Adding a supportable borrower or guarantor
Selling the property
Short-term alternative or private financing
Adding a borrower, changing title or extending amortization may turn the transaction into a refinance rather than a straight renewal.
Subsection — Credit has deteriorated
Credit deterioration can restrict access to a new prime lender even where the existing mortgage has been paid on time.
The analysis should distinguish between:
One isolated credit event
High utilization
Multiple missed payments
Mortgage arrears
Consumer proposal or bankruptcy
A continuing inability to meet obligations
A temporary alternative renewal can be appropriate where the weakness is curable and the borrower has a realistic institutional re-entry plan. It is less suitable where the higher payment merely postpones an unresolved affordability problem.
Subsection — Property value has fallen
A current lender may renew based on the existing mortgage relationship, but a new lender may calculate LTV from a new appraisal or accepted valuation.
A lower value can:
Prevent a transfer
Reduce available equity
Eliminate debt-consolidation capacity
Move the file outside a lender’s LTV policy
Increase the importance of preserving the existing mortgage
Subsection — The mortgage is in arrears
Arrears should be addressed before maturity whenever possible. A lender considering renewal may assess:
Amount and duration of arrears
Payment history
Cause of default
Current income
Property value
Legal stage
Ability to cure the arrears
Future affordability
FCAC expects federally regulated institutions to consider tailored relief for eligible consumers with principal-residence mortgages who face severe financial stress because of exceptional circumstances. Potential relief can include temporary amortization changes, fee relief or other measures, but relief is not automatic and must remain consistent with the lender’s prudential obligations.
Classification: FCAC supervisory expectations for federally regulated financial institutions.
Material qualification: These expectations do not guarantee a renewal, reinstatement or particular relief measure.
Private and alternative mortgage maturity risk
Private and alternative mortgages can involve:
Shorter terms
Renewal fees
Revised pricing at renewal
Extension fees
Conditions for automatic renewal
A requirement to repay the full balance at maturity
Lender discretion not to renew
An individual private lender may need the capital returned for reasons unrelated to the borrower. A MIC or mortgage fund may offer more standardized renewal policies, but these remain contractual and lender-specific.
A borrower should know before signing:
Whether renewal is available
Whether the lender controls renewal in its discretion
What fee or new pricing may apply
What happens if the exit is delayed
How early replacement financing must begin
A maturing private mortgage is not safely managed by beginning the refinance process during the final week. The appraisal, lender review, legal payout and any credit or income repair must be completed before the lender expects repayment.
Retired couple: reinstating the existing mortgage instead of replacing it
A retired senior couple in Wallaceburg owned two residential properties. One carried an existing bank mortgage and HELOC; the other was owned free and clear.
After a renewal-related servicing issue, the mortgaged account entered default. The couple believed they would need a large private mortgage to pay out the bank entirely.
Our analysis showed that replacing the full bank mortgage with a private mortgage would create excessive cost and affordability pressure on limited retirement income. The more suitable question was whether the existing mortgage could be brought back into good standing.
After negotiation, the existing lender agreed to accept the arrears and reinstate the account. A smaller private mortgage was then secured against the free-and-clear property to provide the funds required to cure the arrears.
The immediate outcome was not merely “private financing obtained.” The important underwriting principle was:
Renewal pressure should not automatically lead to replacing an affordable institutional mortgage with a much larger private loan.
The private component remained temporary, with a future review planned once the borrowers’ credit profile improved. Similar borrowers may receive different outcomes, and reinstatement always depends on the existing lender’s agreement.
If You Remember Only Three Things
A renewal offer is one option—not proof of the best available rate, term or structure.
Renewal with the current lender, a straight switch and a refinance are different transactions.
Private and alternative renewal risk should be addressed months before maturity, with a primary and contingency exit.