Mortgage Renewal Rates: What Should You Compare?

It's tempting to reduce a mortgage renewal decision to a single number — the rate — but the rate alone doesn't tell you which offer is actually better for your situation.

It's not just the number

Two renewal offers with the same headline rate can differ meaningfully once you look at term length, prepayment privileges, and penalty structure. A slightly higher rate with better terms elsewhere can outperform a lower rate with restrictive conditions, depending on your plans over the term.

Rate type and term

Fixed and variable are priced differently — fixed rates track Government of Canada bond yields, while variable tracks the Bank of Canada's overnight rate through your lender's prime rate. As of August 2026, that means insured 5-year fixed rates sit around 4.10–4.25%, while prime has held at 4.45% since October 2025. Term length matters too: a shorter term gives you more flexibility to reassess sooner, while a longer term locks in certainty for more years but reduces how often you can react to a changing rate environment.

Prepayment privileges and flexibility

This is the most commonly overlooked comparison point. Prepayment privileges — how much extra you can pay toward your principal each year without penalty — vary significantly between lenders, often between 10% and 20% of your original balance annually, sometimes combined with a payment-increase privilege on top. If you plan to pay down your mortgage aggressively, generous prepayment terms can matter more than a small rate difference.

Fees and penalties

Before comparing final numbers, check what a lender's penalty structure looks like if you need to break the mortgage before term end, and whether there are any fees involved in switching to them (appraisal, legal, administrative) — some lenders cover these as part of a renewal or switch offer, others don't.

Our renewal & switch guide covers each of these comparison points in more depth.

For a step-by-step look at the entire renewal process, start with our guide to mortgage renewal in Canada.