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Mortgage Renewals

Find the best rates for your renewal.

Mortgage Renewals

Renewing your mortgage is a significant event in your life with many considerations. Homeowners will get a mortgage for a set amount of time, known as the term, which is commonly issued for 5 years with an amortization period over 25 years. This means you will most likely renew your mortgage at least 4 times before it is paid in full. At the end of each term, you will be required to pay the balance in full or renew your mortgage. This usually involves renegotiating the terms of your current mortgage contract or accepting the new terms that your existing lender is providing.

When it is renewal time, you will receive a letter from your mortgage lender at least 21 days before the end of your existing term. Your lender must also notify you 21 days before the end of your term if they have decided not to renew your mortgage. It is a good idea to start the renewal process early as most lenders will allow you to renew your mortgage up to 120 days before the end of your term without you having to pay a prepayment charge.

Things to Consider Before Renewing Your Mortgage

In Ontario, real estate prices tend to be higher, which means your down payment will likely be larger. The down payment is the upfront cash amount you put toward buying your home, with the rest being financed through a mortgage. Here’s how it works:

Do you want to adjust how often you make your payments?

Have your finances changed since your last mortgage renewal?

Do you want to be able to make additional payments without incurring any penalties?

Has the economy impacted your spending?

Are you happy with the current interest rate?

Do you need extra cash for renovations or other major expenses?

Do you wish to consolidate your debts and borrow more money to pay off your mortgage?

Are you thinking of selling your home soon?

One of the best times to reassess your overall financial needs is when your mortgage comes up for renewal. With the global economy under pressure facing challenges with inflation while housing affordability deteriorates and debt levels rise, it is more important than ever to assess your own finances. Has your income or expenses changed since you secured your first mortgage? Perhaps you got a promotion at work or are thinking of starting a family and have future expenses to consider. By completing a comprehensive financial assessment, you will determine what you need for your renewed mortgage forecasting a healthy financial future.

Equally important is reviewing your current mortgage details while evaluating the market conditions that can help you capitalize on favorable trends. The first thing you will want to inquire is the remaining balance. What is your current interest rate? Is it a fixed-rate or a variable-rate mortgage? What is the amortization period and payment frequency? Knowledge is power and by familiarizing yourself with these details will prepare you when comparing new mortgage offers. Remember, understanding your current mortgage details and your financial situation is your starting point. Our Uptown Financial Mortgage experts are here to help guide you through the next steps of this complex process helping you save time and money while building a long-term relationship.

Mortgage Renewal Options: Making the Right Choice for You

When your mortgage is up for renewal, it’s a valuable opportunity to reassess your financial situation and make sure your mortgage still fits your needs. Here’s an overview of the options available to you at renewal time.

Renewing with Your Current Lender

Renewing with your current lender is often the easiest option. They’ll send you a renewal offer, but before signing, take a moment to consider if it’s the best fit for your current 

financial situation. Ask yourself:

  • Could you negotiate a better rate?
  • Are the terms still in line with your financial goals?
  • Are there better options available elsewhere?
Negotiating a Better Rate

Don’t accept the first renewal offer without doing some research. As a loyal customer, you have bargaining power. Review current market rates and use this information to negotiate

with your lender. Let them know you’re exploring other options and encourage them to offer their most competitive rate to keep your business.

Switching to a New Lender

If your current lender isn’t offering competitive rates or terms, you might want to consider switching to a new lender. A new lender could offer better interest rates or more

favorable terms. Keep in mind, there may be fees associated with switching, such as legal and appraisal costs, but some lenders may cover these expenses. The potential savings in the long term can often outweigh the initial costs.
Changing Your Mortgage Type

This is also an opportunity to reconsider the type of mortgage you have. You might choose to switch from a fixed-rate mortgage to a variable-rate mortgage, or vice

versa. Your decision should be based on your current financial situation, risk tolerance, and market trends.
Refinancing Instead of Renewing

If you need access to more funds, want to consolidate debt, or need to improve your cash flow, refinancing might be a better option than simply renewing. This would involve

renegotiating your mortgage for a higher amount than what you currently owe. You could also consider extending your amortization period to reduce monthly payments, which can be helpful if you’re facing increased expenses or reduced income.
Taking Advantage of Prepayment Privileges

Before you renew, check if you have the option to make prepayments without penalties. Paying down a portion of your mortgage principal

before renewal can lower your future payments and may lead to more favorable renewal terms.

Tip: Planning Ahead for Potential Mortgage Payment Increases

If you anticipate an increase in your mortgage payments, consider setting aside some extra funds now, provided your financial situation allows it. The amount you save should cover the difference between your current payments and the expected higher payments. This will help you adjust to your new budget gradually while building a reserve that can be used for an emergency fund or applied as a lump-sum payment when you renew your mortgage.

Assessing Your Financial Well-Being

Evaluate Your Income and Spending Habits

When your mortgage is up for renewal, it’s a valuable opportunity to reassess your financial situation and make sure your mortgage still fits your needs. Here’s an overview of the options available to you at renewal time.

Income Sources: These may include regular paychecks, rental income, dividends, or other passive income streams. Regularly updating and assessing your income sources ensures that you’re optimizing your earning potential.

Fixed vs. Variable Expenses: Fixed expenses, like your mortgage or rent, stay consistent, while variable expenses—such as dining out, entertainment, or shopping—can vary. Analyzing both types of expenses can help pinpoint areas where you can cut back and save.

Surplus or Deficit: After calculating your monthly income and expenses, you’ll either have a surplus, which can be directed towards savings or investments, or a deficit, which suggests a need to adjust your budget.

Mortgage Renewal vs. Mortgage Refinance: What’s the Difference?
Mortgage renewal

A mortgage renewal occurs when your current mortgage term ends, and you agree to renew your mortgage for another term. This process extends your existing mortgage, allowing you to continue paying down the loan over the remaining amortization period. During renewal, you’ll work with your lender to set new terms, such as interest rates and the length of the new term, while keeping the original amortization schedule.

Mortgage Refinance

In contrast, a mortgage refinance involves breaking your current mortgage contract and signing a new one. This allows you to make significant adjustments, such as extending the amortization period, changing the loan amount, or even removing or adding someone to the mortgage. Refinancing can also help secure a lower interest rate, particularly if rates have dropped before your term ends, or it can enable you to tap into your home equity for purposes like renovations, debt consolidation, or investment opportunities.

Renewing vs. Refinancing Your Mortgage: A Side-by-Side Comparison

Choosing between renewing or refinancing your mortgage depends on several factors, including your current mortgage term, financial situation, future goals, and current market conditions.

Criteria

Renewal

Refinance

When?
Occurs at the end of your current mortgage term.
Can be done at any point during your mortgage term.
What?
Extending the terms of your current mortgage agreement.
Breaking your existing mortgage to enter into a new agreement.
Why?
Renegotiate your interest rate, term length, and mortgage type.
Access home equity, change amortization period, or get a lower rate.
How?
Renew with your current lender or switch to a new one.
Refinance with your current lender or explore other lenders.
Pros
No penalties for staying with the same lender, and switching may not require stress testing.
Full renegotiation of your mortgage terms. Potentially lower rates and payments, and the ability to consolidate debt.
Cons
Fees may apply if switching lenders. Insured mortgages may need to pass a stress test if switching lenders.
Legal, appraisal, and discharge fees may apply. You may also need to pass a stress test with the new lender.

Whether it’s your first time renewing your mortgage, or you’ve been through the process before, our team is here to provide the expert guidance you need for your next move. Reach out to us today to speak with one of our specialists about your mortgage renewal options.

Renewing Your Home Mortgage: 10 Must-Ask Questions

It’s best to start considering your mortgage renewal around 4 to 6 months before the end of your current term. This gives you enough time to evaluate your options, negotiate with your current lender, or explore other lenders for better rates and terms.
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Yes! Mortgage renewal is the perfect time to negotiate for a better interest rate with your lender. Don’t settle for the first offer. Do some research on current market rates and use that information to leverage better terms with your lender.
Switching lenders can be a great option if another lender offers a better interest rate or more favorable terms. Keep in mind that switching lenders might involve some fees, like legal and appraisal costs, but some lenders cover these expenses. The long-term savings could be worth it.
Renewing with your current lender typically doesn’t involve fees unless you decide to make changes, such as converting from a variable-rate to a fixed-rate mortgage. However, switching to a new lender may involve legal, appraisal, and discharge fees, although some new lenders might cover these costs.
Absolutely. At renewal, you can change your mortgage type (e.g., switch from a fixed-rate to a variable-rate mortgage), adjust your term length, and even refinance to borrow more or consolidate debt. Just remember, refinancing may come with additional fees.
If you don’t renew your mortgage before your term expires, your lender may automatically renew it under the same conditions but potentially at a higher interest rate. To avoid this, start planning early and ensure you’ve made a decision by the renewal deadline.
Refinancing can be a good option if you need access to extra funds, want to consolidate debt, or are looking for a lower interest rate. Refinancing involves breaking your current mortgage and signing a new one, which allows for more flexibility in terms but may also come with penalties or fees.
Many lenders allow you to make lump-sum payments without penalties when renewing your mortgage. This can reduce your principal balance and potentially lower your monthly payments or help you secure better renewal terms.
Yes, if your mortgage is uninsured and you want to switch lenders, you may need to pass the government-mandated stress test. This ensures you can handle payments if interest rates rise. However, renewing with your current lender typically doesn’t require a stress test.
If you anticipate interest rates going up, you might consider locking in a fixed-rate mortgage at renewal. Another option is to save the difference between your current and future anticipated payments. This will help ease the transition to higher payments and improve your cash flow.