You are exempt from the mortgage stress test in two main situations: a straight renewal with your existing lender, and — since November 21, 2024 — a straight switch of your mortgage to a new lender at renewal, as long as the loan amount and amortization do not change. In almost every other situation, including a new purchase or a refinance, the stress test still applies in full.

The stress test rule, in brief

For federally regulated lenders, the stress test means you must qualify for your mortgage at a higher rate than the one you will actually pay. Your qualifying rate is the higher of your contract rate plus 2%, or the Bank of Canada benchmark rate.

The lender uses that qualifying rate to test your payments against your income and debts. You still make your real payments at your actual contract rate — the stress test is a qualifying hurdle, not a price.

Exemption 1: A straight renewal with your existing lender

If you simply renew your mortgage with the lender you already have, there is no new mortgage application — and no stress test.

Renewing extends your existing mortgage rather than creating a new approval, so you are not re-qualified. This is why your lender can send a renewal offer without asking for fresh income documents.

There is a catch. Because your lender knows you can renew without qualifying again, its first offer is not always its best. Posted rates are a starting point, and rates are sometimes negotiable — which is exactly why the second exemption matters.

Exemption 2: A straight switch to a new lender at renewal

Effective November 21, 2024, the Office of the Superintendent of Financial Institutions (OSFI) removed the stress test requirement for straight switches of uninsured mortgages to a new lender at renewal. A matching exemption applies to insured mortgages making a straight switch.

A “straight switch” has a precise meaning:

• You move your existing mortgage to a different lender at renewal.
• The loan amount stays the same — you do not borrow additional money.
• The amortization stays the same — you do not extend your repayment timeline.

If those conditions are met, the new lender does not apply the stress test. You still go through an application and must meet the new lender’s own lending criteria — but the higher qualifying rate is not part of the process.

This changed the renewal conversation in Canada. Before the change, an uninsured borrower who could not pass the stress test at a new lender was effectively stuck with their current lender, whatever rate was offered. Now borrowers can genuinely shop at renewal. Travis works with multiple lenders offering different and sometimes more competitive products — contact us and we’ll shop across lenders for you.

Where the stress test still applies

The exemptions are narrow. The test still applies in these common situations:

New purchases. Buying a home requires full qualification under the stress test, alongside the standard minimum down payment rules: 5% on the first $500,000, 10% on the portion from $500,000 to $1,500,000 for an insured mortgage, and 20% down for an uninsured mortgage, with insured purchases capped at $1.5 million.

Refinances. If you borrow more money, access equity, or change your amortization, it is a refinance, not a straight switch, and you must qualify under the stress test.

Home equity lines of credit (HELOCs). A HELOC is new borrowing against your home, not a renewal or a switch, so stress test qualification applies.

The lenders the federal rules do not cover the same way

The stress test described here is a federal requirement for federally regulated lenders. Not every lender in Canada is federally regulated. Some credit unions are provincially regulated and follow their provincial regulator’s rules, which can differ. Private lenders operate under still different standards, often focusing more on the property and your equity than on a standardized qualifying rate.

That does not automatically make those options better. Their rates, fees, terms, and renewal conditions can differ significantly, and a mortgage that is easier to qualify for today can cost more later. The right question is not just “can I avoid the stress test?” but “what does this mortgage cost me over the full term?”

What this means at your renewal

You have three paths: renew with your current lender without a stress test, switch without a stress test if the switch is truly straight, or refinance with a stress test if you change the amount or amortization. Start several months before renewal and compare offers — since November 2024, the stress test is no longer a reason to skip that comparison.

Common questions

Q: If I renew with my current lender, do I ever have to pass the stress test?
A: Not on a straight renewal — there is no new application and no stress test. The test enters the picture only if you refinance or take out new borrowing such as a HELOC.

Q: Can I switch lenders at renewal without the stress test if my mortgage is uninsured?
A: Yes. Since November 21, 2024, OSFI has exempted straight switches of uninsured mortgages from the stress test, provided the amount and amortization stay the same. Insured straight switches have a matching exemption.

Q: What makes a switch “straight” — and what disqualifies it?
A: A straight switch moves your mortgage to a new lender at renewal with the same loan amount and amortization. Borrowing extra or extending the amortization disqualifies it — the transaction is then a refinance requiring stress test qualification.

Q: Does being exempt from the stress test mean automatic approval at a new lender?
A: No. The exemption removes only the higher qualifying rate. The new lender still reviews your application, credit, income, and debts, and you must meet its regular lending criteria.

Q: I want to switch lenders and take out a little extra for renovations. Am I exempt?
A: No. Increasing the loan amount makes it a refinance rather than a straight switch, so you will need to qualify under the stress test at the higher of your contract rate plus 2% or the Bank of Canada benchmark rate.

Q: Do credit unions and private lenders have to apply the stress test?
A: Not always in the same way. Some credit unions are provincially regulated and follow different rules, and private lenders set their own criteria — so compare the full cost, not just the qualifying hurdle.

Talk to a broker before you sign anything

Renewal is one of the few moments when the rules genuinely work in your favour — but only if you compare your options before signing your current lender’s first offer. Start with a mortgage pre-approval and renewal review through Next Door Mortgages, or call Travis Bannert at 780-720-8240 to check whether a straight switch could beat your renewal offer.

By Travis Bannert, Realtor and Mortgage Broker

— Travis Bannert, licensed Mortgage Broker with BFL Dominion Lending Centres