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Automatic renewal is the default outcome if a borrower takes no action by the mortgage’s maturity date: the lender rolls the mortgage into a new term, commonly at its posted rate rather than a negotiated discounted rate. It keeps the mortgage from technically going unsecured, but it is rarely the borrower’s best financial outcome.
Lenders send a renewal statement before maturity offering a rate, but that offer is often the starting point for negotiation, not the best available rate. If the borrower does not respond, the lender is contractually permitted to renew the mortgage automatically at its standard terms — frequently the higher posted rate — simply to keep the mortgage in good standing.
Comparing offers, negotiating with the current lender, or arranging a switch/transfer to a new lender before maturity all avoid an automatic renewal and typically produce a better rate than doing nothing.
Lender must send notice: federally regulated lenders are required to provide advance renewal disclosure (a renewal statement) before maturity under Canadian consumer protection rules.
Default is rarely the best rate: an automatic renewal typically uses the lender’s posted rate rather than a negotiated discount, since no negotiation took place.
No new stress test on a straight renewal: renewing with the same lender at the same amount and amortization does not require re-qualifying at the minimum qualifying rate.
Acting before maturity avoids it: borrowers who compare rates or contact their broker/agent before the renewal deadline can typically avoid the automatic, less competitive outcome entirely.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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