Renewals

As your mortgage term draws to a close, it’s time to consider your renewal options. Many homeowners simply renew with their current lender, assuming it’s the easiest route. However, this approach could cost you more in the long run. Here’s why taking the time to explore your options at renewal is essential.

What Happens at Renewal?

In Canada, mortgages typically come with terms ranging from one to ten years. When your term expires, your interest rate and possibly your terms need to be renegotiated. Your lender will usually send you a renewal offer about 120 days before your term ends. It’s crucial to remember that while this offer may seem convenient, it’s not always the most competitive rate available.

The Risks of Auto-Renewal

A surprising number of homeowners automatically renew their mortgage with their existing lender without considering alternatives. This could lead to higher interest rates, as lenders often count on this complacency to maximize their profits. They know that the majority of people won’t shop around, so they might not offer their best rate upfront.

The Costs of transferring your mortgage at maturity

There are absolutely no fees, including legal or appraisal, for transferring your mortgage at maturity. Sometimes lenders try to slip in a “convenience fee”, but we’ll make sure that gets covered either by the new lender or directly from us.

Why Shopping Around Pays Off

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  • Shopping around isn’t just for first-time homebuyers; it’s equally important when renewing your mortgage. The Bank of Canada has shown that those who switch lenders at renewal or use a mortgage broker typically save more money than those who stay with their current lender. Even a slight reduction in your interest rate can save you thousands of dollars over the life of your mortgage.
  • Consider this: if you save just 0.2% on a $300,000 mortgage, that could mean over $2,600 in savings during a 5-year term. These savings can make a significant difference to your overall financial health.

Three Key Renewal Strategies

When your mortgage is up for renewal, you generally have three options:

1

Stay with Your Current Lender

This is the easiest route but often the most expensive. Without checking other offers, you might miss out on better rates available in the market.

2

Shop for Better Rates

Start your search within the 120-day period before your renewal date. By comparing offers from different lenders, you can secure a rate hold that protects you against potential rate increases. When your current lender makes an offer, you’ll be in a better position to negotiate.

3

Beware of “Limited-Time” Offers

Lenders might tempt you with offers that require early renewal. While these may sound appealing, they often come with conditions that limit your ability to shop around or could cut short the benefits of your existing lower rate. Always compare these offers with what’s available through other channels, such as mortgage brokers.

Breaking Free from Your Lender

Many homeowners mistakenly believe they have to stick with their current lender. The truth is, you have the freedom to switch lenders if a better deal is available. A mortgage broker can help you explore your options and find the most competitive rates and terms, whether you choose to stay or switch.

Maximizing Your Mortgage Renewal

When it’s time to renew your mortgage in Calgary, don’t just go through the motions. Take the opportunity to reassess your options and ensure you’re getting the best possible deal. With the right strategy and support, you can navigate your mortgage renewal confidently, securing a rate and terms that truly work for you.

After all, your mortgage is one of the biggest financial commitments you’ll make—let’s make sure it continues to serve you well.

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