This is educational content and referral only — mortgage origination itself is outside scope here.
It covers the basics of renewal timing, fixed vs. variable considerations, and when refinancing might free up cash flow to redirect toward the 10% savings goal.
- Stress test rate
- Contract rate + 2%
- Straight switch at renewal
- No requalification
- Scope here
- Education and referral only
- Start renewal review
- 4 to 6 months early
Or a 5.25% floor, whichever is greater
For uninsured mortgages moving to a federally regulated lender
Renewal is a decision, not a formality
The renewal letter your lender sends is an offer, not a fixed rate. Accepting it without comparison is one of the most expensive default choices in household finance, because the convenience of signing is priced in.
Rate holds are typically available several months before maturity, so beginning the conversation four to six months out gives you room to compare without time pressure. A straight switch to another federally regulated lender at renewal does not require requalifying under the stress test — provided the loan amount does not increase beyond roughly $3,000 in fees, the amortisation is not extended, and no equity is withdrawn.
Fixed versus variable
There is no permanently correct answer, only a trade-off between certainty and flexibility. Fixed gives you a known payment for the term, which is worth a great deal if your budget has little slack. Variable moves with the prime rate, historically costing less on average but requiring the capacity to absorb increases.
- Fixed-rate mortgages typically carry higher penalties to break early, calculated using an interest rate differential that can be substantially more than three months’ interest
- Variable-rate mortgages usually cap the penalty at three months’ interest, which matters if you may move or refinance mid-term
- A shorter term reduces the cost of being wrong about rate direction
When refinancing frees up cash flow
Refinancing consolidates higher-interest debt into the mortgage at a materially lower rate, which reduces the monthly outflow. That freed-up cash flow is what makes a 10% savings habit possible rather than theoretical.
The mechanism only works if the freed-up amount is actually redirected. Stretching amortisation to lower payments and then spending the difference increases total interest paid over the life of the loan while leaving the underlying position unchanged — the same trap that makes debt consolidation succeed or fail.
Worth checking before you decide
- Request a written penalty quote before breaking a mortgage — interest rate differential calculations vary between lenders
- Compare the total cost including fees, not the headline rate alone
- Ask about prepayment privileges, since lump sums applied to principal shorten amortisation considerably
- Refinancing or taking equity out generally does require passing the stress test, unlike a straight switch
- Mortgage origination is outside scope here — this is educational content and referral to a licensed broker
Common questions
Should I take the renewal offer from my current lender?
Compare it against the market first. Because a straight switch at renewal does not require requalification for uninsured mortgages, moving lenders is often simpler than people expect, and a competing quote gives you something to negotiate with.
Does using a broker cost me anything?
For standard residential mortgages, brokers are generally compensated by the lender rather than the borrower. Confirm the arrangement up front in any case.
Is it better to pay down the mortgage or invest?
It depends on your mortgage rate, your marginal tax rate, and how you weigh guaranteed savings against uncertain returns. Paying down debt is a certain return equal to the interest rate, which is worth more than it appears when rates are elevated.
Important
This page provides general information only and is not personalized financial, tax, or legal advice. Product features, availability, and eligibility vary by provider. Figures shown are for the 2026 tax/benefit year and are subject to change — book a conversation with Supriya to confirm what applies to your situation.