Should I switch lenders at mortgage renewal?
Usually yes on balances above $300,000. A 0.30%–0.50% better rate from a competing lender typically saves $5,000–$12,000 over five years on a $400K balance — far more than the $300–$1,500 in switching costs. Below $200K, negotiating with your existing bank is often the better call.
The math is straightforward: multiply the rate difference by your average balance over the term. A 0.40% rate difference on $500,000 over 5 years is roughly $10,000 in interest. Switching costs (appraisal, discharge, legal) usually total under $1,500, and many lenders run 'switch programs' that cover them entirely.
The main reasons NOT to switch: (1) your mortgage is registered as a collateral charge with legal costs of $700–$1,000, and the rate savings don't clear that hurdle; (2) your credit or income has deteriorated and you won't qualify elsewhere; (3) your existing lender matches within 0.05%–0.10%.
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Jay Klair, Mortgage Agent Level 2 (M09000869) — Real Mortgage Associates, FSRA #10464, part of the DLGC Group of Companies · 5675 Whittle Rd, Suite 100, Mississauga, ON L4Z 3P8