Renewal and
Refinance Cycles

In the Canadian mortgage ecosystem, the expiration of a term is not merely a date but a multi-stage procedural sequence. It begins exactly 120 days before the maturity date, a window known as the "Early Renewal Period." During this phase, the primary lender generates a renewal offer based on current internal liquidity and retention targets. If the borrower fails to execute a new agreement or initiate a transfer, the system defaults to an "Open Term," which typically carries a significantly higher interest rate—often 300 to 400 basis points above the market average—to ensure liquidity for the lender.

The secondary phase involves the "Market Delta Assessment." This is where the borrower compares the retention offer against the broader market. According to 2023 industry data, approximately 60% of Canadian homeowners renew with their existing lender despite the availability of more efficient rates elsewhere. This inertia often results in a "loyalty tax," where the existing institution offers a rate higher than that provided to new acquisitions. To mitigate this, the renewal sequence must include a verification of the Federal Stress Test Algorithm, as moving to a new lender requires a re-qualification under current regulatory standards.

Finally, the "Discharge and Assignment" protocol is executed if a transfer is selected. This involves the legal movement of the mortgage charge from Lender A to Lender B. In a standard "Switch," the loan amount and amortization remain constant, allowing for a cost-free transfer in many cases. However, if additional capital is required, the process shifts from a Switch to a Refinance, triggering a new legal registration and associated administrative costs.