Is your mortgage coming up for renewal? Whether this is your first renewal or you’ve done it before, it’s worth taking the time to explore your options. Because interest rates, mortgage terms, and your financial circumstances may have changed since you first arranged your mortgage, your current mortgage may no longer be the best fit. Reviewing your mortgage lets you compare rates, review your monthly payments, and choose what works for your next term. Here’s what you need to know about how mortgage renewals work in Canada and what to consider before signing a new agreement.
What Is a Mortgage Renewal in Canada?
A mortgage renewal happens when your current mortgage term ends, but you still owe a balance. In Canada, mortgage terms commonly range from one to five years, although longer terms are available. At the end of your term, you’ll need to renew your mortgage or repay the remaining balance.
Renewing involves agreeing to a new interest rate, term length, and other mortgage conditions. You can renew with your existing lender or explore options from other Canadian lenders. Unlike refinancing, which changes your borrowing arrangement and may let you access additional home equity, a straightforward renewal generally keeps your existing mortgage balance with updated terms.
When Should You Start the Mortgage Renewal Process?
I recommend reviewing your mortgage options approximately 120 days before your renewal date. Starting early gives you time to compare lenders, review your budget, and consider whether your current mortgage still meets your needs. Some lenders offer rate holds or early renewal options, although availability and conditions vary.
If you have a mortgage with a federally regulated financial institution, your lender must provide a renewal statement at least 21 days before your term ends. This statement includes important information about your mortgage balance, interest rate, and proposed renewal terms. Remember, you don’t have to wait for this statement to begin exploring your options.
How to Renew Your Mortgage in Canada
The mortgage renewal process doesn’t have to be complicated. Knowing what to expect and starting early gives you time to review your current mortgage, compare offers, and choose the terms that make the most sense for your financial situation.
Review Your Current Mortgage
Start by checking your existing mortgage balance, interest rate, and maturity date. Also review your mortgage features, including prepayment privileges and potential penalties. Knowing what you currently have makes it easier to compare new offers.
Reassess Your Financial Goals
Your circumstances may have changed since you first arranged your mortgage. Perhaps your income has increased, you’re planning renovations, or you’d prefer more predictable monthly payments. Review your household budget and consider what you want from your next mortgage term.
Compare Mortgage Renewal Offers
Your existing lender will generally provide a renewal offer, but you don’t necessarily have to accept it. For example, you might prefer the payment certainty of a fixed-rate mortgage or the flexibility of a variable-rate option. The right choice depends on your circumstances and how comfortable you are with interest rate changes.
Complete Your Renewal
Once you’ve selected an option, the next step is completing the required paperwork. Switching lenders can involve additional documentation, qualification requirements, and administrative steps. If you’re staying with your existing lender and aren’t changing your mortgage amount, the process may be relatively straightforward.
What Documents Do You Need for a Mortgage Renewal?
Required documents for a mortgage renewal depend on whether you’re staying with your current lender or switching to a new one. A straightforward renewal with your existing lender may require little additional documentation. Self-employed homeowners may need additional income proof. Avoid delays by gathering the necessary paperwork early.
If you’re switching lenders, you may need to provide:
- Recent pay stubs or other proof of income
- Employment information or a letter of employment
- Your current mortgage statement
- Property tax information
- Details about existing debts and financial obligations
Should You Renew With Your Current Lender or Switch?
Staying with your existing lender may be more convenient, but switching could give you access to more competitive rates, different mortgage terms, or features that better suit your needs. It’s important to weigh these potential benefits against any switching costs, such as discharge, registration, or legal fees. I can help you compare mortgage renewal options to determine whether switching lenders makes financial sense for your situation.
Make Your Next Mortgage Term Work for You
Mortgage renewal is an opportunity to ensure your financing continues to support your needs. Your financial situation and priorities may have changed since you last arranged your mortgage, so it’s worth considering whether your current payment structure, mortgage term, and available features still make sense for you.
With over 20 years of mortgage experience and access to dozens of lenders, I can help you compare renewal rates, review mortgage features, and prepare for your next term. Whether your renewal is approaching or still several months away, get in touch with me to explore your options with confidence.
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Andrew Thake is a seasoned mortgage broker with over 15 years of industry experience. He’s assisted more than 2,200 clients in finding their ideal mortgage solutions. Recognized for his excellence, Andrew has received high honours and awards, including the National Rookie of the Year from TD Canada Trust and recognition as a Top 10 Ottawa Mortgage Broker in 2023. He has also been inducted into the Hall of Fame at Dominion Lending Centres and has consistently received their Platinum Award during his tenure as a mortgage broker.
Andrew’s dedication lies in serving his clients and prioritizing their needs with an empathetic approach. Throughout the application process, he provides tailored, informed, and efficient services to ensure the best mortgage solutions for his client’s unique circumstances. The best part of Andrew’s job is when he gets to see the joy on his clients’ faces following their mortgage approval.
