re-mortgage your house

A mortgage renewal is when you have an existing mortgage contract that is coming to an end.  The mortgage needs to be renewed into a new contract, this contract will have new rates, terms, and options.

In Canada, when you have a mortgage, your lender commitment has an interest rate, a term, and an amortization period.  The typical starting amortization period is 25 years, although you can sometimes extend that to 30 years if you have 20% down or more.  The interest rate is determined by the length of term you select, this can be anywhere between 1-5 years.  

Once your mortgage contract term is up i.e. if you selected a 5-year term in July of 2019, your mortgage contract will mature in July of 2024.  When this date comes, you must renegotiate with your current lender OR shop around and find a new lender. 

How does the renewal process work?

This process can feel overwhelming, but rest assured it is very simple.

You have 2 options to consider when your mortgage is up for renewal.

Option 1: 

You are simply going to just sign an agreement with your current lender.  Yes, it is just that easy.  So why would anyone take option 2?  Well, a little-known fact is that many lenders will only give you what they believe you will take, and from my experience, it is always higher than the market has to offer.  That is a price you pay for convenience.

Option 2: 

You decide you want to see if there are other, more competitive, options.  You can elicit the services of a mortgage broker or do the shopping yourself from bank to bank.  When your mortgage comes for renewal you will be required to provide documentation for the new lender. But why?  This is because they need to ensure you qualify for the mortgage again, this does create a bit more work BUT that payoff is almost always worth it as you save money by finding a lower rate and hopefully a better product.

Things to consider with your mortgage renewal

Your mortgage renewal is an opportunity to look at your current situation and reflect on what the priorities will be in the next mortgage term. 

Questions you can ask:

A Mortgage Broker or Bank specialist should be asking questions to be able to better understand YOU as an individual.  

Does it cost money to move your mortgage?

Typically, no.  But there are some cases where there could be a charge (this varies from province to province).    

MANY factors need to be considered when determining what can be done with your renewal, and what options are available to you.  But fear not, that is what a mortgage broker is licensed to do and experienced in doing.  We will help navigate things for you!

When should I start my mortgage renewal process?

I always recommend people start reaching out around 4 months before their mortgage renewal.  Starting the process early gives ample time to get things in order and paperwork in so that there aren’t any delays.  It also gives you protection from rate increases if you start early.

My lender offered me an early mortgage renewal, is this the same as a normal mortgage renewal?

No, early renewals are exactly what they sound like.  The lender renews your mortgage the moment you sign the agreement that they send out.  Anybody renewing their mortgage in 2024, 2025 and 2026 will see higher rates than the current contract they are under.  So why would you lock into higher rates sooner than you have to?  You wouldn’t!  

Never take an early renewal, you may miss out on lower rates down the road.

What documents do I need to supply to shop out my mortgage renewal?

While this can vary depending on your situation, below is a generic list of what you may need:

Can a lender decline my mortgage renewal?

Although it is rare, yes, any lender has the right to refuse to renew your mortgage.  This happens IF you have shown to be delinquent on your mortgage payments during the term you had.  If that is the case, they can decline your renewal.  If this happens, you will have to shop around to find another lender or you will have to sell your home.

What happens if I don’t sign a mortgage renewal agreement and my maturity date passes?

Depending on your lender, they may automatically renew you into their open variable rate or a 6-month closed rate.  These rates are NOT your friend, they are typically much higher than you will get in the market, this is why we say START EARLY!!!

Mortgage Renewal tips and tricks

Here are some best practices and strategies that we recommend to ensure you get the best options at renewal.

Remember, don’t be late to the party and
ALWAYS get a 2nd opinion on your renewal offer.