Mortgage renewal is one of the most financially significant events in a Canadian homeowner's life — yet most Ontario homeowners approach it passively, accepting whatever rate their current lender offers without comparison shopping. In 2025, with hundreds of billions of dollars in Canadian mortgages coming up for renewal and rates having shifted dramatically from the ultra-low 2020–2022 environment, the stakes of this decision have never been higher. Here are the seven most costly mistakes Ontario homeowners make at renewal — and how to avoid every single one.

Mistake #1: Accepting the First Offer from Your Current Lender

Your current lender will send you a renewal offer — typically 30–60 days before your maturity date. This offer is almost never their best rate. Banks and lenders count on inertia: most homeowners will just sign and send back. Studies show that only 30% of Canadian mortgage holders switch lenders at renewal. The other 70% leave money on the table. The average rate difference between the "renewal slip" offer and what a mortgage broker can source is 0.5–1.0% annually. On a $600,000 mortgage over a 3-year term, that's $9,000–$18,000 in interest.

Mistake #2: Starting the Renewal Process Too Late

In Ontario, you can begin shopping for renewal rates 120 days (4 months) before your maturity date — penalty free. Most homeowners don't start until 30 days out, which is too late to switch lenders and complete legal transfer in time. Starting 90–120 days early gives you time to: compare rates across 20+ lenders, negotiate with your existing lender using competing offers, and complete the switch if necessary. Mark your renewal date in your calendar today and set a reminder for 120 days before.

Mistake #3: Choosing a 5-Year Fixed Without Analyzing the Rate Curve

Five-year fixed is the most popular mortgage term in Canada by a wide margin — and it's not always the right choice. In 2025, with the Bank of Canada having cut rates multiple times from the 2023 peak and further cuts expected, shorter terms (1-year, 2-year, 3-year fixed) or variable rates may offer better long-term economics. Analyze the rate curve before defaulting to 5-year fixed.

Mistake #4: Not Considering Penalty Implications

If your renewal is approaching, you are within the penalty-free window — but only if you wait for your maturity date. Switching lenders requires a legal transfer, which costs $800–$1,500 in legal fees (often covered by the new lender). If you are considering breaking your mortgage before maturity to lock in a new rate, you must calculate the IRD penalty to ensure the math works. Your broker can do this calculation for you in minutes.

Mistake #5: Ignoring Prepayment Privileges at Renewal

Renewal is the best time to increase your prepayment privileges. Most standard mortgages allow 10–20% annual lump-sum payments and 10–20% payment increases without penalty. If you anticipate income growth, inheritance, or other lump sums in the coming term, ensure your new mortgage has generous prepayment options — this can dramatically reduce your amortization and total interest paid.

Mistake #6: Not Reviewing Your Full Financial Picture at Renewal

Renewal is a natural inflection point. Ask yourself: Has your income changed significantly? Do you have high-interest debt that could be consolidated into the mortgage at renewal? Has your property value increased enough to access equity for renovations or investments? Are you planning to move within the next 3–5 years (which affects what term makes sense)? A renewal review should encompass your full financial picture, not just the rate on a slip of paper.

Mistake #7: Using Your Bank's Preferred Mortgage Specialist Instead of a Broker

Your bank's mortgage specialist represents one lender. A licensed mortgage broker represents 20–30+ lenders and has a fiduciary obligation to act in your best interest. The broker service costs you nothing at renewal — brokers are compensated by the lender who receives your business. Using a broker costs nothing and gives you access to the entire market.