Mortgage Renewals

If your mortgage term is coming to an end, you’re not alone—thousands of homeowners in Ontario go through the mortgage renewal process every year. While it may seem like a straightforward process, there are key details that can make a big difference in your financial future. I’ll walk you through everything you need to know about mortgage renewals in Ontario, helping you make informed decisions with confidence.

What Is a Mortgage Renewal?

A mortgage renewal occurs when your current mortgage term expires, and you need to sign a new agreement with your existing lender or switch to a new lender. Unlike a mortgage refinance, which involves renegotiating loan terms before the term ends, a renewal simply extends your mortgage for another term, typically with a new interest rate and possibly different conditions.

The Mortgage Renewal Process: Step-by-Step

1. Receiving Your Renewal Offer

Lenders in Ontario are required to send you a mortgage renewal offer at least 21 days before your term expires. This offer typically includes a new interest rate and term options. Many homeowners simply sign and return the offer without exploring other options, but this could cost you money in the long run.

2. Reviewing Your Current Mortgage

Before accepting a renewal offer, take a step back and evaluate your current mortgage:

• What is your remaining mortgage balance?

• Are you comfortable with your current monthly payments?

• Has your financial situation changed since you first took out your mortgage?

• Are there better rates or terms available in the market?

3. Shopping Around for Better Rates

Your lender’s first offer may not be the best one available. It’s always a good idea to compare rates from different lenders, including banks, credit unions, and mortgage agents. A mortgage agent can help you access multiple lenders and find the most competitive terms.

4. Negotiating with Your Current Lender

If you find better rates elsewhere, don’t hesitate to negotiate with your current lender. Many lenders are willing to match or beat competitor rates to keep your business. Be sure to ask about flexible terms, such as prepayment privileges and portability options.

5. Making Your Decision

Once you’ve compared offers, decide whether to renew with your current lender or switch to a new one. If you’re switching lenders, keep in mind that you may need to go through a new approval process, including a credit check and documentation review.

Factors to Consider When Renewing Your Mortgage

1. Interest Rates

Rates fluctuate, and the offer from your lender may not be the most competitive. Research fixed vs. variable rates to determine which option aligns with your financial goals.

2. Term Length

The length of your new term (e.g., 1, 3, 5 years) impacts your interest rate and flexibility. Shorter terms may offer lower rates but require more frequent renewals.

3. Prepayment Privileges

Some lenders allow you to make extra payments toward your principal without penalties. If you plan to pay off your mortgage faster, look for a lender with favorable prepayment terms.

4. Portability and Flexibility

If you’re considering moving in the near future, a portable mortgage allows you to transfer it to a new property without penalties.

Common Mortgage Renewal Mistakes to Avoid

• Automatically Accepting Your Lender’s Offer: Always explore other options before signing.

• Waiting Until the Last Minute: Start reviewing your options at least 4-6 months before your renewal date.

• Not Considering Future Financial Goals: Your mortgage should align with your long-term plans, whether it’s paying off debt, investing, or upgrading your home.

How a Mortgage Agent Can Help

A mortgage agent can provide expert advice, shop around for the best rates, and negotiate on your behalf. Brokers have access to multiple lenders and exclusive offers that may not be available to the general public.

Final Thoughts

Mortgage renewals are an opportunity to secure better rates, improve your financial flexibility, and ensure your mortgage aligns with your long-term goals. By being proactive, comparing offers, and seeking expert guidance, you can make an informed decision that benefits your financial future.

If your mortgage renewal is approaching and you’d like expert advice, feel free to reach out. I’d be happy to help you navigate the process and find the best solution for your needs!