How Does a Mortgage Renewal Work in Canada?

If you have a mortgage coming up for renewal in Canada, it’s best to know the facts before diving in, to help you make the most of this. That’s where I’m happy to lend a hand! If you are unsure how the process works, or if you have specific concerns, I can walk you through the fundamentals and help you make an informed decision.

Here is a rundown of what you should know about mortgage renewals in Canada.

Defining a Mortgage Renewal in Canada

A mortgage renewal is a process that typically takes place at the end of your mortgage term where you can explore a variety of options from various lenders. This is primarily done to obtain a more favourable interest rate compared to what your current lender is offering you, helping you save as much interest as possible. The result is the ability to potentially save thousands of dollars, which can then be used instead for important renovations, new furnishings, or that long-planned family vacation. 

When Do You Typically Renew Your Mortgage?

The renewal process usually takes place when your mortgage matures, which is at the end of your term. If at a five-year fixed rate for example, this would be at the end of the five-year mark. However, mortgages can come with terms of up to 10 years, so the time at which you are up for renewal will depend on when that term ends. Some lenders also offer earlier renewal options. This can mean renewing several months earlier. Renewal rates could be lower or higher than what you have currently, but you’ll need to choose from what is available at the time.

How to Complete a Mortgage Renewal

It all starts with a renewal statement, which is sent to you by the mortgage lender. If your lender is a federally regulated financial institution, it is provided to the borrower within 21 days of the term’s end date. In this document, you’ll be informed of figures including the remaining mortgage balance, and notably, the interest rates available for you at the time of renewal. 

At this stage, it’s important to negotiate with the lender as they usually do not provide the lowest possible interest rates. There may be alternative options in terms of term length or otherwise that can reduce the interest rate as well. If you don’t get in touch with your lender, they may automatically renew your mortgage into terms that are not favourable, so taking action is important in order to avoid this. Some lenders and major banks allow for early mortgage renewals, enabling you to lock in an interest rate several months before the new term starts.

Mortgage Renewal Tips

If you're planning on renewing your mortgage, there are a few things you should keep in mind. Here are some tips to help you make the process as smooth and stress-free as possible.

• Don’t be afraid to shop around. You’re not limited to merely accepting what your current lender offers, and there’s plenty of other lenders out there. These include credit unions, online lenders, major banks, and more.
• Budget in advance to determine what the sweet spot is for you in terms of the interest rate. What’s too high for your financial situation? This will help to narrow down options if considering multiple lenders. 
• Reach out to an experienced broker to help you make well-informed choices and negotiate for the best possible rates through their lender connections.
• Renewing early may be a great way to avoid rate increases (as mentioned above). This depends on the lender and whether there are penalties.

Why Renew Your Mortgage Through an Experienced Broker?

An experienced broker comes with ample expertise and market insights, not to mention established relationships with different types of lenders. They will handle the entire process with care and precision, your information will be processed promptly. Our commitment is towards helping you receive the best possible rate and most favourable conditions on your renewal. The right broker should also have the knowledge and communications skills necessary to help you navigate the entire process. 

When all is said and done, it’s a win-win situation to have the right broker on your side. Come mortgage renewal time, you can count on me to secure the best possible terms and rates while providing you with plenty of guidance. Renewing your mortgage should be an easy, stress-free, and cost-saving experience, and I’m happy to make it happen! Get in touch today, and let’s chat about your needs as a homeowner.