Can you pay off your mortgage at renewal in Canada?

The FCAC lists five: pay off the mortgage in full, renew with your current lender, switch to another lender for the same loan amount, negotiate a lower rate with your current lender, or let the lender renew automatically if it says it will. Paying off in full means you have enough cash or another way to settle the whole balance.

Source: Financial Consumer Agency of Canada: Renewing your mortgage (modified October 15, 2025, read November 11, 2026).

The FCAC says you can make a lump-sum payment on top of regular payments, before or at the end of your term, or on dates set in your contract. Your lender may call this a prepayment or prepayment privilege. Going over the amount your contract allows can trigger a penalty.

• Read your contract for your yearly prepayment limit.
• Ask your lender whether there are discharge or other fees to close the mortgage. The FCAC lists administration, appraisal, reinvestment and discharge fees as costs of breaking a mortgage.

Sources: Financial Consumer Agency of Canada: Paying off your mortgage faster (modified October 15, 2025, read November 11, 2026); Financial Consumer Agency of Canada: Breaking your mortgage contract (modified October 15, 2025, read November 11, 2026).

The FCAC says a penalty is usually the higher of 3 months of interest on what you still owe, or the interest rate differential, known as IRD. Lenders usually use the IRD if your rate is higher than the current rate and you signed less than 5 years ago. The FCAC's example is a $200,000 balance at 6% with 36 months left, which gives $3,000 for 3 months of interest and $12,000 for the IRD, so the penalty is $12,000.

The FCAC says that if the penalty would be large, consider waiting until the end of your term to prepay. It does not say that a penalty can never apply at renewal, so check your contract.

Source: Financial Consumer Agency of Canada: Mortgage fees, prepayment penalties (modified October 15, 2025, read November 11, 2026).

• Mortgage prepayment penalty: how it works
• Mortgage penalty calculator

• Keep your payment the same after you get a lower rate. The FCAC says this helps you pay the mortgage off faster.
• Raise your payment, even by a small amount. Your contract may limit how much you can raise it each year.
• Pick an accelerated weekly or biweekly payment. The FCAC says it equals one extra monthly payment a year.
• Make lump sums within your yearly limit.

Source: Financial Consumer Agency of Canada: Paying off your mortgage faster (modified October 15, 2025, read November 11, 2026).

• Monthly, biweekly or accelerated payments
• Mortgage renewal calculator

Paying off a mortgage uses your cash. Think about an emergency fund and other debts with higher rates first. This is general information, not advice. A lender or a financial counsellor can look at your numbers.

• How much emergency fund do you need?