Renewal Rates, Costs and 2026 Rules
Do you need to pass the stress test to switch lenders at renewal?
When the mortgage stress test applies at renewal in Canada, what counts as a straight switch since November 2024, and what a new lender still checks before approving you.
No, not for a straight switch. Since 21 November 2024, OSFI no longer expects federally regulated lenders to apply the minimum qualifying rate (the "stress test") when an uninsured mortgage moves to them at renewal, provided the loan amount and amortization stay the same. Insured mortgages switching at renewal are also not re-tested at the qualifying rate. You still have to apply and be approved: the new lender checks your income, credit, property and debt ratios at the actual contract rate. If you borrow more, extend the amortization or change the mortgage in other ways, it is no longer a straight switch and the stress test applies.
This guide is part of the mortgage renewal rates overview. Rules are described as of October 2026; check OSFI's current Guideline B-20 for any later changes.
What the stress test is
OSFI's Guideline B-20 sets underwriting expectations for federally regulated lenders such as banks and federally regulated trust and loan companies. For uninsured mortgages, it sets a minimum qualifying rate: the greater of the contract rate plus 2 percentage points, or 5.25%. The lender must check that you could afford payments at that rate. Insured mortgages have a parallel qualifying rule under the federal government's mortgage insurance rules.
Before November 2024, an uninsured borrower who wanted to move to another bank at renewal had to pass the qualifying rate again. Someone who qualified comfortably in 2021 might fail it in 2024 after rates rose, which left them stuck with their current lender's offer. OSFI removed that requirement for straight switches, which made switching possible for many more households.
What counts as a straight switch
| Change at renewal | Straight switch? | Stress test at the qualifying rate? |
|---|---|---|
| Same balance, same remaining amortization, new lender | Yes | No |
| Same balance, new term length or rate type | Yes | No |
| Balance increased (refinance, debt consolidation) | No | Yes |
| Remaining amortization extended | No | Yes, in most cases |
| Adding a HELOC or new credit on the same charge | Usually treated as new credit | Yes, for the new borrowing |
| Removing or adding a borrower | Depends on the lender | Often yes |
| Staying with the current lender | Not a switch | No re-qualification in most cases |
If you want to extend the amortization or borrow more, compare the cost of doing it with your current lender, which may not re-qualify you, with switching and qualifying. See extending your amortization at renewal.
Worked example: why the change matters
Illustrative figures: $420,000 balance, 20 years left, outside offer at 4.19%.
- Payment at the contract rate: $2,579.30
- Qualifying rate before the change: greater of 4.19% + 2 = 6.19% or 5.25%, so 6.19%
- Payment at 6.19%: $3,036.13
The lender would have had to show your debt ratios worked with a payment of about $3,036, which is $456.83 more than the real payment. A household with income of $110,000 and other debts could easily fail that test while comfortably affording the real payment. For a straight switch, the lender now uses the actual payment.
What a new lender still checks
Not facing the qualifying rate does not mean automatic approval. Expect:
- An application with personal details, employment and income.
- Income documents: recent pay stubs and an employment letter; for self-employed borrowers, usually Notices of Assessment and T1 Generals for two years.
- A credit check with Equifax Canada or TransUnion Canada.
- Debt service ratios. For insured mortgages, CMHC's limits are a gross debt service ratio of 39% and a total debt service ratio of 44%. For uninsured mortgages, lenders set their own limits.
- The property. An appraisal or automated valuation, and confirmation the property is owner-occupied if that is what you applied for.
- The existing mortgage. A payout or discharge statement from your current lender, and details of any collateral charge.
Provincially regulated lenders
Credit unions, Quebec's Desjardins caisses and some provincial trust companies are regulated by their provinces, not OSFI. They set their own underwriting policies, often similar to B-20 but not always the same, and may apply a qualifying rate on switches that a bank would not. Ask any credit union or caisse directly how it treats a switch at renewal. The provincial regulator, such as FSRA in Ontario, BCFSA in British Columbia or the Autorité des marchés financiers in Quebec, publishes its guidance.
Timing a switch
- Apply three to four months before maturity, when most rate holds start.
- Ask your current lender for a discharge statement for the maturity date.
- Confirm the new lender's funding date matches your maturity date exactly. Funding even a day early can trigger a penalty; a day late can mean the old lender auto-renews you.
- In Quebec, allow time for the notary appointment; see Quebec renewal differences.
Compare the outside offer with your renewal in the renew-vs-switch calculator, and read the renew or switch worked example for the full cost picture.
Insurance status changes which rules apply and which rate tier you get; see insured vs uninsured renewal rates.
Frequently asked questions
Does the November 2024 change apply to credit unions?
It applies to federally regulated lenders. Provincially regulated lenders follow their own regulator's rules and their own policies, so ask each one.
If my income dropped, can I still switch?
Possibly, if your debt ratios still work at the actual contract rate and the lender accepts your income. If they do not, staying with your current lender, which usually does not re-qualify you, may be the realistic option, and you can still negotiate its rate.
Is a switch with a cash-back offer still a straight switch?
Usually, if the balance and amortization do not change. Cash-back typically comes with a clawback if you leave early, so read the terms.
Will switching hurt my credit score?
The new lender's credit check is a hard inquiry, which can lower a score slightly for a while. Shopping within a short period helps limit the effect.
Sources
- Office of the Superintendent of Financial Institutions — Guideline B-20 and the minimum qualifying rate
- Financial Consumer Agency of Canada — switching mortgage lenders at renewal
- Canada Mortgage and Housing Corporation — insured mortgage rules and debt service ratios
- Financial Services Regulatory Authority of Ontario — credit unions and mortgage brokers in Ontario
- BC Financial Services Authority — credit unions and mortgage brokers in British Columbia
