Mortgage Renewal Calculator (Canada)

At the end of your term the outstanding balance comes due. Your lender sends a renewal offer listing one or more rates and terms, and if you sign it the mortgage simply continues at the new rate with the remaining amortization intact. Nothing else changes: no new approval, no appraisal, no legal work.

That convenience is exactly why the offered rate is often 0.20% to 0.80% above what the same lender will quote a new client. Renewal is a pricing decision the lender makes about how likely you are to shop. Countering with a competing quote, or moving the mortgage, is usually worth far more per hour than any other mortgage decision you make.

• Renew as offered — quickest, usually the most expensive
• Negotiate with your existing lender using a competing quote in hand
• Switch lenders (a straight transfer of the same balance) for a better rate
• Refinance instead, if you also want to change the amount or amortization

A switch, sometimes called a transfer, moves the same balance to a new lender on the same remaining amortization. It is inexpensive, often free, and carries no penalty when it happens at maturity. A refinance changes the mortgage itself — a larger balance, a longer amortization, or consolidated debt — and is treated as a new mortgage with full qualifying and legal costs.

If your goal is only a lower rate, a switch is the tool. If you want to pull out equity, roll in high-interest debt or extend amortization to lower the payment, a refinance is the right route even though it costs more to arrange.

Both scenarios are priced with semi-annual compounding, the Canadian standard for fixed rates, so payments match what a lender would actually quote. Each side is amortized over your remaining years, then run forward across the new term to produce the interest paid and the balance left standing at maturity.

The net saving combines two things: less interest paid over the term, and a lower balance remaining at the end of it. Switch costs are subtracted from that total, which is why a small rate gap on a small balance can be a wash while the same gap on a large balance is thousands.

Most lenders will hold a rate for 90 to 120 days before maturity, so a quote gathered four months out protects you if rates rise and can usually be improved if they fall. Starting late is the single most common reason people end up signing whatever was mailed to them.

If you do nothing at maturity, most Canadian lenders convert the mortgage to an open or short-term rate that can be several points higher. That is an expensive way to buy a few weeks of thinking time.

• Four to six months out: request your balance, maturity date and payout statement
• Three to four months out: collect competing quotes and hold a rate
• Two months out: counter your lender's offer or start the switch paperwork
• Two weeks out: confirm the new lender has funded and the old mortgage is discharged