Mortgage Renewal Process in Canada: What to Expect and How to Prepare

Renewing Your Mortgage? Here’s What You Need to Know

Your mortgage term is coming to an end, and you’re faced with a big decision—renew with your current lender or explore better options. Many homeowners simply sign the renewal papers without looking at alternatives, potentially missing out on lower rates or better terms. Lenders count on this.

The good news? You have the power to negotiate and save money. But to do that, you need to understand how the mortgage renewal process works and what steps to take before your term expires.

Here’s how you can approach it strategically.

Key Takeaways

Mortgage renewal isn’t automatic—you have options beyond your current lender.

Rates and terms vary, so shopping around could save you thousands.

Lenders send renewal notices 21 to 120 days before your term ends.

Negotiating can lower your interest rate or help you secure better terms.

Your financial situation matters—income, debt, and credit score affect your options.

1. When and How the Mortgage Renewal Process Begins

Lenders in Canada must notify you at least 21 days before your mortgage term ends, but many send renewal offers 90 to 120 days in advance.

At this stage, your lender will present a new offer, usually with a pre-set rate and term. However, this is not your only choice. You can accept, negotiate, or switch to a different lender.

Key Tip: Start reviewing your options four months before renewal to give yourself time to compare offers and negotiate better terms.

2. How Interest Rates Affect Your Mortgage Renewal

Interest rates fluctuate, and the rate you locked in years ago may no longer be competitive. The Bank of Canada’s rate hikes directly influence mortgage rates, which means renewing without checking market rates could cost you more.

For example, a 0.5% lower rate on a $400,000 mortgage could save you over $10,000 in interest over five years.

What You Can Do:

Compare fixed vs. variable rates before renewing.

Check lender promotions for lower rates.

Consider a shorter or longer term based on market trends.

3. Why Shopping Around Could Save You Thousands

Lenders rely on customer retention and often don’t offer their best rate upfront. Over 60% of Canadians renew with their current lender without negotiating.

However, switching lenders can lead to lower interest rates, better payment options, or cash incentives. Many lenders even cover transfer fees to win your business.

Steps to Shop Around:

Request quotes from at least three lenders.

Ask your current lender to match the lowest rate you find.

Work with a mortgage broker who can compare multiple lenders for you.

4. Factors That Impact Your Renewal Options

Your lender may reassess your financial situation before renewing your mortgage, especially if you switch lenders. Factors that affect your options include:

Credit Score: A higher score can help you qualify for lower rates.

Debt Levels: High debt-to-income ratios could limit your choices.

Income Stability: Lenders may require proof of income if your situation has changed.

If your financial situation has improved, you might qualify for better terms. If it has worsened, renewing with your current lender may be the best option, as switching could require a full re-qualification process.

5. Should You Renew Early or Wait Until the Term Ends?

Some lenders allow early renewals up to 120 days before your term ends, often with no penalty. This can be a good option if rates are rising. However, if rates are expected to drop, waiting until the last moment might save you money.

Best Approach:

Lock in early if rates are going up.

Wait and monitor rates if a decrease is expected.

Always negotiate before signing.

Making the Right Move for Your Mortgage Renewal

Mortgage renewal is your chance to reassess your financial goals and secure the best deal possible. Whether you stay with your current lender or switch, taking the time to compare options and negotiate can lead to significant savings.

Key Steps to Take Now:

Mark your renewal date and start researching at least 4 months in advance.

Compare renewal offers from different lenders to get the best deal.

Don’t accept the first renewal offer—negotiate for better conditions.

Consider working with a mortgage broker for expert advice.

A little preparation goes a long way in making sure your next mortgage term works in your favor. Take control of your renewal process and maximize your savings!

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