Stress Test Removed for Mortgage Transfers: What It Means for You in 2025

If your mortgage renewal is coming up, there’s a big change in 2025 that might just save you thousands of dollars. Thanks to recent regulatory updates, you can now switch your mortgage to a new lender at renewal — without having to pass the dreaded mortgage stress test.

This is a major win for Canadian homeowners. For years, the stress test kept many borrowers locked into higher rates with their current lenders, simply because they couldn’t requalify under stricter guidelines. Now, that barrier is gone — and competition is heating up among lenders who want your business.

Let’s break down what this change means for you and how to take advantage of it.

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What Was the Mortgage Stress Test, and Why Was It Introduced?

The mortgage stress test was introduced to protect the financial system. In short, it forced borrowers to prove they could afford mortgage payments at a much higher rate than what they were actually being offered — typically the higher of 5.25% or 2% above your contract rate.

While this helped prevent mortgage defaults, it also locked many responsible borrowers into higher-cost mortgages at renewal, especially during times of rising interest rates.

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The Big News: Stress Test Removed for Mortgage Renewals

As of late 2024, federal regulators have removed the stress test requirement for all straight switches — meaning:

• You’re renewing your existing mortgage.
• You’re not increasing the loan amount (except maybe a small bump to cover legal fees).
• You’re keeping your amortization schedule the same.

If that’s your situation, you can now shop around for a better rate with a different lender — no requalification needed.

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Who Benefits the Most?

• First-time buyers whose incomes haven’t kept pace with rates
• Borrowers from 2020–2022 now facing a 30–40% payment shock
• **Anyone who felt “trapped” by the stress test in a rising rate environment

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Breakdown: Which Mortgages Are Affected?

Insured Mortgages (Less than 20% down)

If your mortgage is insured through CMHC or another provider, you’ve technically been exempt from the stress test on renewal for years — but most people didn’t know that.

Now, this exemption is widely recognized and built into lender processes, giving you the green light to switch without worry.

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Portfolio-Insured Mortgages (Low-ratio, insured by the lender)

As of December 2024, the federal government clarified that these mortgages can also be switched at renewal without requalification — as long as it’s a “straight switch.”

That means:

• No increase in mortgage amount (except small admin costs)
• No change to amortization period
• No new property purchase

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Uninsured Mortgages (20%+ down, not insured)

The biggest win might be here. Starting November 2024, even uninsured borrowers — those with 20%+ down payments — can now switch lenders without having to pass a stress test.

For years, these borrowers faced the most friction in switching. That’s now over.

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Why This Matters for Homeowners

In plain terms, this means you’re no longer stuck with your current lender just because you can’t “requalify” under outdated assumptions. This opens the door to:

• Lower rates
• Better terms
• More leverage in negotiations

With 60% of Canadian mortgages coming up for renewal by 2026, this change comes at the perfect time — especially for those staring down much higher monthly payments.

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Tips to Maximize This Opportunity

1. Compare rates early: Don’t wait until your renewal notice comes in. Start rate shopping at least 4 months in advance.

2. Talk to a mortgage broker: A broker can help you navigate lender options and identify whether your mortgage is insured, insurable, or uninsured — which matters now more than ever.

3. Watch for lender tricks: Some lenders may offer a low rate, but include hidden fees or rigid conditions. Read the fine print.

4. Know your numbers: Even without the stress test, your credit score, debt load, and income stability still matter when switching.

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Frequently Asked Questions

Do I still need to meet lender approval requirements?
Yes — you still need to pass basic lender guidelines (like income verification and credit check). The stress test exemption just means you don’t have to requalify at the higher rate.

Can I switch and increase my mortgage amount at the same time?
No — if you want to borrow more, it’s considered a refinance, and the stress test still applies.

What’s the difference between insured and insurable mortgages?
An insured mortgage is covered at the time of purchase. An insurable mortgage meets CMHC guidelines but is insured in bulk by the lender later. Both are now exempt from stress testing at renewal for straight switches.

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Final Thoughts

This change is a game-changer for Canadian mortgage holders. For years, the stress test prevented even the most responsible borrowers from accessing better deals. Now, you have real power to shop around, negotiate, and switch lenders — without requalifying.

It’s a clear sign that regulators recognize the need for flexibility in a high-rate environment. If your renewal is coming up, don’t miss this window of opportunity.

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