What Is a Mortgage Renewal?

October 22, 2012

Mortgage renewals have a way of sneaking up on you just like birthdays. Chances are that when you receive your renewal notice in the mail you will be caught off guard and simply sign back your  lender’s offer without negotiation. In fact, roughly  70% of Canadian mortgage holders do this. And it’s costing them hundreds of dollars in unnecessary interest expense. Here are some tips on how to deal with your mortgage renewal and negotiate the best rate.
When you bought your home you signed a mortgage agreement that stayed in effect for a certain period, called the term. The most popular term is 5 years, however there are terms everywhere between 6 months to 10 years. When your mortgage term comes to an end also known as maturity, you basically have 3 choices:

  1. pay off your mortgage
  2. renew it for another term with your existing lender
  3. switch to another lender of your choice for a new term

Mortgage maturity is an important event in the life of your mortgage to reassess what you need in a mortgage and to look for mortgage options that better fit your needs today. Not to mention negotiate a lower rate!

Mortgage Renewal Process

What to expect from your existing lender

In most cases your existing mortgage lender will be happy to keep you as a client and extend financing to you. If your mortgage agreement is with a federally regulated financial institution, your lender must provide you with a renewal statement at least 21 days before the end of the existing term.  By the same token in the rare event that  your lender decides not to renew your mortgage, it must notify you at least 21 days before the end of your term.

What you should think about before your mortgage matures

Mortgage renewal is an important event in the life of your mortgage so be sure to take an active approach to finding a new mortgage that best meets your needs. Your mortgage payment is likely one of the biggest chunks of your household budget. Shopping around and negotiating with your current lender will save you money. Be warned that if you don’t take charge of the process, your mortgage might automatically be renewed for another term. This means that you may not get the best interest rates and conditions that you could.
Mortgage Renewal is the time to reassess your needs. Ask yourself the following questions to help you find the right mortgage:
• Are you satisfied with the services offered by your current lender?
• Does your household budget allow you to increase your mortgage payments so you can pay off your mortgage sooner?
• Do you want to change your payment frequency?
• Can you make prepayments?
• Do you want to consolidate other debts that have higher interest rates?
• Do you need money for a major renovation?

When to start shopping around?

Most lenders provide mortgage approvals with a 120 day commitment periods so approximately four months before the end of your mortgage term is a good time to start looking. Contact various lenders and a mortgage broker (like me!) to find a new mortgage with the terms and conditions that best suit your needs. When you are negotiating an interest rate, ask your current lender if they can offer you even better terms and conditions than in your previous mortgage term.

Get me to work on your mortgage renewal

Let me help you with your mortgage renewal to make the process easier and provide the guidance and insight you need. As an independent mortgage broker I have access to a variety of lenders, products and rates all in a convenient one stop shop. Best of all my services are free of charge to you. Let me help you negotiate with your existing lender and if they can’t offer you a competitive mortgage I’ll help you switch to a lender who deserves your business. Here what my clients have to say about me and get in touch today.


Christopher Molder

Mortgage Broker

Christopher is a mortgage broker based in Toronto, Canada. And a son of a broker too. He’s a second generation mortgage broker. Following in his father’s steps he joined the family mortgage business straight out of university.