Deborah Kearns
Kurt Woock
Banks are vying for the 1.2 million Canadian mortgages up for renewal in 2025.
It’s a known fact that homeowners benefit from increased competition for their business, but what’s surprising is where some are finding the better deal.
In a Reddit thread in r/MortgagesCanada, several users reported lackluster experiences getting renewal quotes from a broker. They found better rates and faster service by shopping directly with banks.
Joaquin Bustillo, a mortgage broker with Clear Trust Mortgages in Toronto, says he’s seen this trend play out, too.
“Banks who retain a customer don’t have to pay commissions to anybody, so they are more willing to give rate cuts on a renewal just to retain that customer than they are on a new mortgage or if you’re refinancing to a brand new mortgage,” he says.
If you plan to work with a broker but are also curious about potentially getting a better rate by negotiating directly with a bank, here are a few things to consider before getting started.
1. Keep your options open
Don’t assume you must sign an exclusivity agreement to work with a mortgage broker. This type of arrangement is actually uncommon, unlike the exclusivity arrangement you’d typically have with a real estate agent.
If a broker chooses to require a contract, it’s on them to communicate the risks and requirements to their clients, according to the Financial Services Regulatory Authority of Ontario. If you sign an exclusivity agreement, you lose the option to contact lenders directly.
So if you want to be free to explore all potential options, don’t work with a mortgage broker who requires this type of agreement.
2. Talk to your current lender first
If your loan is up for renewal, your current lender must either send you a renewal statement or notify you they’re not renewing your mortgage at least 21 days before the end of the existing term, according to the Financial Consumer Agency of Canada.
Don’t wait until then to explore options; start comparing renewal rates three or four months before your term expires.
Bustillo recommends shopping with your existing lender and one or two other banks first before approaching a broker. This gives you an idea of what the big banks are offering before you ask a broker to look for something better.
He also recommends telling your bank that you plan to shop around so they’ll compete for your business.
Keep in mind that if you change lenders on renewal, you may have to requalify. Your new lender will assess your credit and finances, and you’ll pay fees for a home appraisal, discharge, registration and other potential costs. Lenders might be willing to cover these costs to win your business.
Compare renewal rates at a glance.
See today’s best renewal rates from Canada’s top lenders and brokerages.
3. Be transparent with your broker
Most established brokers prefer when clients are transparent about shopping for the best rate.
“There is no problem with shopping,” Bustillo says. “Keep in mind, our job is to shop around for you. Just be transparent. There are some people that will go to other [lenders] just intentionally to play them on each other, but they never really have any intention of going through with an application.”
He adds that if you show a broker the bank offers you’ve received, they’ll be upfront as to whether or not they can do better with the lenders they work with. That saves everyone time and effort — and avoids burning bridges with your broker if you want to work with them in the future.
4. Look beyond the rate
Sure, you want to save on interest payments, but the renewal rate isn’t the only factor to consider.
Some lenders may offer attention-grabbing rates but impose restrictive loan terms, such as limited prepayment options or steep fees for breaking the contract early. Plus, bank employees are limited in the loans and strategies they can recommend.
Brokers, on the other hand, may provide educational insights on strategic mortgage moves and have access to more loan options.
For instance, they can recommend longer amortization periods for cash flow relief or suggest home equity products that work best for your renovation goals, Bustillo says. You won’t always get that level of insight and product guidance (or variety) from a bank loan officer.
“The cheapest rate isn’t always the best solution,” Bustillo emphasizes. Some “no-frills” mortgages offer great rates but lock borrowers into limited refinancing options where the only way to cancel is to sell your house, he points out.
Make sure you’re comparing apples to apples on products instead of fixating just on rates.
About the Author
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