Short answer
At renewal you are free to accept your lender's offer or move the mortgage to another lender, and you do not need to re-qualify to stay where you are. Switching lenders at renewal carries no prepayment penalty, though the new lender may require you to qualify. Renewal offers are negotiable, and shopping the renewal is usually the single easiest place to reduce a mortgage payment.
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Mortgage Renewal Overview
Your mortgage renewal sneaks up when the term of your mortgage is close to maturing. It's likely that your life and the economy have shifted since you last signed your mortgage agreement — what worked for you before may not serve you any longer.
Your mortgage renewal can be a great opportunity to match your mortgage more accurately with your lifestyle and goals. Maybe you'd like to shift from a fixed to a variable rate, or you'd like more flexibility for pre-payment privileges. A licensed mortgage broker can help you explore all available options.
How Do You Know When It's Time to Renew?
If your mortgage is provided through a bank or another federally regulated institution, by law the lender must provide you with a renewal statement — or a document stating that the lender has decided they won't renew your mortgage. This document must be submitted to you at least 21 days before your original mortgage term ends.
In their statement the lender must include the:
It's recommended that you connect with a licensed mortgage broker months before your renewal date to ensure your best interests are put first.
Important Considerations at Renewal Time
Just because your mortgage is up for renewal does not mean you are required to renew with your current lender. It's important to stay informed about current market conditions and ensure you're happy with whatever future arrangement you agree to.
A licensed mortgage broker can help you make favourable decisions by:
Costs of Switching Lenders at Renewal
If you decide to switch lenders at renewal, there may be costs involved. These can include:
These costs aren't the deciding factor on their own — the general rule of thumb is that if the benefits of switching lenders outweigh the costs, then it's worth considering. A licensed mortgage broker will calculate the full picture to help you make an informed decision.
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Frequently Asked Questions
When should I start planning for my mortgage renewal?
It's best to start 4-6 months before your maturity date to explore options and lock in a favorable rate. This gives you time to compare lenders and negotiate the best terms.
Can I switch lenders at renewal without penalties?
Yes! At renewal you can switch lenders without any prepayment penalties, and in many cases the new lender will cover the legal and appraisal costs.
Should I just sign the renewal letter my bank sends?
Not necessarily. Your current lender's renewal offer is often not their best rate. Working with a mortgage broker gives you access to 100+ lenders to ensure you're getting the most competitive deal available.
Can I change my mortgage terms at renewal?
Yes, renewal is the perfect time to adjust your mortgage term, switch between fixed and variable rates, change your payment frequency, or access different pre-payment privileges.
