For a clean Canadian renewer file with a 30 to 60 basis-point gap between the bank's renewal letter offer and broker-channel best, switching saves $5,000 to $10,000 over a five-year term on $400,000. Typical switch costs ($300 if the receiving lender absorbs legal and appraisal, $1,500 if not) get cleared by margin. The calculator confirms it for your specific file.
Terminology note: "renewal letter offer" here means the rate your bank writes on the renewal letter you receive in the mail (typically the bank's "retention" rate, not their formal Posted Rate, which sits 100 to 200 bps higher). Broker-channel best refers to the lowest discounted offer available through a licensed mortgage brokerage on capture day.
The bank's renewal letter sits in front of you. The competing broker quote sits next to it. The question is whether the rate gap clears the switch costs over a fresh five-year term, and the calculator works that exact arithmetic. Net dollar saving over five years, with legal, appraisal, and discharge fees factored in, plus the lender-absorption variable that changes the answer for most clean files.
How does the math work?
The five-year interest figure for each rate is computed by amortizing the balance at the rate over the remaining amortization, summing the interest portion of every monthly payment for 60 months. Canadian semi-annual compounding (Interest Act s. 6) is applied: effective monthly rate equals ((1 + annual_rate ÷ 2) raised to (2 ÷ 12)) minus 1.
The interest saved is the renewal-letter-rate five-year interest minus the market-rate five-year interest. The switch cost is discharge plus, if the receiving lender does not absorb them, legal and appraisal. The net value is interest saved minus net switch costs.
This is the rate-only comparison. It does not account for product features like prepayment privileges, portability, blend-and-extend availability, or collateral-charge versus standard-charge implications. The renewal-letter calculator covers the eight-item completeness checklist that goes beyond rate.
How the switch-cost line items break down
Discharge fee
Charged by the outgoing lender to release their security on the property. Per FCAC the discharge fee typically ranges from no charge up to $400. Whether the receiving lender absorbs this fee varies by lender - FCAC directs borrowers to ask the receiving lender whether they will cover the cost of a mortgage discharge as part of the switch.
Legal or title-transfer fees
The new lender registers a fresh charge on title. On a switch (versus a refinance with new principal), the legal work is simpler and cheaper than a refinance. FCAC publishes that professional fees for a mortgage discharge typically run $400 to $2,500. FCAC also directs consumers to ask the receiving lender whether they will cover the cost of a mortgage discharge as part of the switch. Confirm with the receiving lender before assuming.
Appraisal
Sometimes required, sometimes waived. The receiving lender follows OSFI Guideline B-20 sound underwriting principles on appraisals; the form (automated valuation versus physical appraisal) is the lender's decision based on the file. Often absorbed when ordered.
The lender-absorption variable
This is the variable most calculators miss. On switches where the receiving lender is competing for the file, it is common (not universal) for the receiving lender to absorb legal and appraisal. Discharge-fee absorption varies by lender - RBC's switch program explicitly covers up to $300 of the discharge fee; TD's coverage is variable; Scotia bundles up to $1,500 of switch costs into a fee credit that may include discharge. The difference between an absorbed and non-absorbed switch materially changes the answer for narrow-spread files; FCAC's component ranges (no charge to $400 for discharge, $400 to $2,500 for professional fees) describe the published envelope before any absorption.
The OSFI November 2024 amendment makes switching easier
One regulatory change worth knowing about: effective November 21, 2024, OSFI exempted uninsured straight switches from the prescribed Minimum Qualifying Rate stress test. A straight switch means same loan amount, same remaining amortization. Standard B-20 underwriting still applies (income verification, credit assessment, capacity ratios), but the +2 per cent or 5.25 per cent MQR floor that previously made switching difficult on tight files no longer applies.
For renewers whose income or debt situation has changed since origination but who can still pay their existing mortgage payment, this amendment opens up switch options that did not exist before.
What do readers ask AI tools about this?
Numbers refer to late April 2026. Re-verify against linked primary sources on your decision day.
What does it cost to switch mortgages at renewal in Canada?
FCAC publishes the component ranges: discharge fees from no charge up to $400 (where unregulated) plus professional fees of $400 to $2,500 for the legal/title-transfer work. Some files include an appraisal as well. Many competitive lenders absorb legal and appraisal as an incentive on clean files with balances above $300,000, so out-of-pocket can be substantially lower than the FCAC envelope.
Is switching lenders at renewal worth it for a 30-basis-point rate gap?
On a $400,000 balance with 25-year amortization remaining, a 30-basis-point gap saves roughly $5,500 to $5,800 over a five-year term. That clears typical switch costs of $1,000 to $1,500 by a wide margin, and clears them by an even wider margin when the receiving lender absorbs legal and appraisal. For a clean file, the answer is yes for any spread above 10 basis points; for a non-absorbed file, the threshold is closer to 15 to 20 basis points.
Do I have to requalify when I switch lenders?
Yes, but under the OSFI November 2024 amendment, uninsured straight switches (same loan amount, same remaining amortization) are exempt from the prescribed Minimum Qualifying Rate stress test. Standard B-20 underwriting still applies (income, credit, capacity), but the +2 per cent or 5.25 per cent MQR floor that previously made switching difficult on tight files no longer applies for clean straight switches.
What should you do next?
- Get your renewal letter in writing from your current lender. The offered rate is your "renewal letter offer" input above.
- Get at least one competing market quote, ideally from a brokerage that quotes multiple lenders. The discounted rate they offer is your "Market" input.
- Run the calculator with both rates and your file's balance and remaining amortization.
- Phone the receiving lender and ask, in writing, whether they absorb legal and appraisal on a switch of your size. Toggle the absorption checkbox accordingly.
- If the net value of switching is positive after costs, the answer is switch. The dollar number from the calculator is what walks your decision.
Need a competing market rate to plug into the calculator above? See what 30+ lenders are quoting today. See live rates →
Step 2 above needs a competing market quote. Here is one.
The hardest part is getting the comparison rate in writing. A licensed brokerage runs your file against thirty-plus discounted offers and returns a written rate hold within forty-eight hours. The hold is good for ninety to one-hundred-twenty days, drops with the market on cuts, and commits you to nothing.
Get a market quote from Homewise →Affiliate link. RenewalRate.ca earns a commission if your mortgage funds through Homewise. This does not change the rate or fees offered to you. Homewise is an FSRA-licensed mortgage brokerage (licence #12984).
Whose advice should you trust on this?
The calculator above runs Canadian semi-annual compounding correctly and accounts for the switch-cost line items in the typical structure. What it cannot do is run your specific file through a real lender's underwriting and bring back a written rate commitment. For that step, Homewise (FSRA #12984) is a Canadian licensed brokerage that quotes multiple lenders online. RenewalRate.ca earns a commission on funded mortgages routed through Homewise.
Sources
- OSFI MQR exemption for uninsured straight switches, November 21 2024
- OSFI Guideline B-20: Residential Mortgage Underwriting
- Interest Act s. 6 (Canadian semi-annual compounding rule)
- FCAC: Mortgage discharge
- Ratehub: Current best Canadian mortgage rates
Methodology last reviewed: . How we verify every claim.