Don’t Wait Until the Last Minute to Review Your Mortgage Renewal

John Lee - Arise Mortgage
11 minutes ago
3 min read

For many Canadian homeowners, a mortgage renewal can feel straightforward. Your lender sends you an offer, you review the new rate, sign the paperwork, and move on.

But your renewal is also an opportunity to reassess your mortgage strategy.

And in the current Canadian mortgage environment, waiting until your renewal date is approaching can significantly reduce the number of options available to you.

Your Renewal Offer Is Only One Option

When your existing lender sends a renewal offer, it may be convenient to simply accept it. Convenience, however, doesn’t necessarily mean it is the best fit for your financial situation.

Before renewing, it can be worth looking at questions such as:

Is another lender offering a more competitive mortgage?
Would a different term make more sense for your plans?
Have your income, debts or financial priorities changed?
Are you planning to sell, move or refinance during the next term?
Could your mortgage features be just as important as the interest rate?

The more time you have to answer these questions, the more flexibility you have to make a strategic decision.

Why Starting Early Matters

One of the biggest advantages of reviewing your mortgage before the renewal deadline is simply having time on your side.

Switching lenders isn't always an instant process. A new lender may need to review your income, credit, property information, existing debts and other documentation before approving the mortgage.

Starting early gives you time to gather those documents, compare lenders and understand the numbers without making a rushed decision.

Depending on the lender and product, there may also be an opportunity to secure a rate hold while continuing to evaluate the market.

If you wait until the final weeks before renewal, a potentially attractive option may no longer be practical simply because there isn't enough time to complete the process.

In other words, you may end up choosing the mortgage you can get in time instead of the mortgage that best fits your situation.

Rate Isn't the Only Number That Matters

A lower advertised rate can certainly be attractive, but rate alone doesn't tell you whether one mortgage is better than another.

A proper comparison can also include:

Prepayment privileges: How much additional principal can you pay without a penalty?

Penalties: What could it cost if you need to break your mortgage before the end of the term?

Portability: Can you take your mortgage with you if you purchase another property?

Flexibility: Does the mortgage fit your future plans, or could its restrictions become expensive later?

Switching costs: Are there appraisal, legal, discharge or other costs associated with moving lenders?

Sometimes a slightly different mortgage structure can make more financial sense than simply chasing the lowest available rate.

Your Financial Situation May Have Changed Too

Your mortgage was originally arranged based on your circumstances at that time.

A lot can change during a three-year or five-year term.

Your income may have increased. You may have accumulated other debts. Your home may be worth more or less than before. You may be considering renovations, investments, moving homes or changing your monthly cash flow.

That makes renewal a useful opportunity to look at your overall financial picture, rather than treating it as another piece of paperwork.

For some homeowners, staying with the current lender will still make perfect sense.

For others, switching lenders, restructuring the mortgage or considering a different term could create a better fit.

The important part is having enough time to find out.

The Best Time to Think About Renewal Is Before You Have To

Mortgage renewal shouldn't have to be a last-minute decision.

Starting the conversation a few months ahead of your renewal date can give you more time to understand the market, prepare your documents, compare your options and decide what makes sense for your next mortgage term.

You don't necessarily need to change lenders.

You simply want to know what your options are before your deadline starts making the decision for you.