When you take out a mortgage, you’ll be committed to it for the duration of your term. And once your loan term’s expiry date approaches, you’ll need to renew your mortgage if you are not yet ready to pay your outstanding loan balance off in full.
But what exactly is involved in a mortgage renewal? Can you renegotiate new terms and rates? And are you able to move over to another lender?
Let’s dig deeper into mortgage renewals to help you prepare for when your term nears its end.
| Amount | Rate | Availability | Products | ||
 Loans Canada | Varies | Varies | All of Canada | - First mortgage - Refinancing - Renewal - Lender switch - Home equity loans | Get Started |
 Neo Mortgage | Varies | 4.64% | All of Canada except Quebec | - First mortgage - Refinancing - Renewal | Get Started |
 Alpine Credit | $10,000+ | Based on equity | All of Canada except Quebec | - Home equity loans | Get Started |
 Mortgage Maestro | $10,000+ | 4.45%+ | All of Canada except Quebec | - First mortgage - Refinancing - Renewal - Line of credit (HELOC) - Reverse mortgage | Get Started |
 Homewise | Varies | Varies | BC, AB, MB ON, | - First mortgage - Refinancing - Renewal - Lender switch | Get Started |
 Fairstone | Up to $50,000 | 19.99% to 24.49% | All of Canada | - Home equity loans | Get Started |
When you take out a mortgage, you are committed to the conditions of the loan, including the term, for a set amount of time. You can choose from a variety of term lengths, from as little as 6 months to 10 years, though the average term length for mortgages in Canada is 5 years.
Once your mortgage term is set to expire, you’ll need to either pay the entire loan balance in full or renew your mortgage. Considering the large loan amounts associated with mortgages, most borrowers will continue to renew their mortgage every 5 years until the full amount is paid off.
All federally-regulated financial institutions are required to provide borrowers with a mortgage renewal statement a minimum of 21 days before the existing term expires.
A mortgage renewal statement contains important information about your mortgage when you renew, including the following:
Depending on your mortgage lender, the interest rate stated on your renewal statement cannot increase within 30 days of your mortgage’s maturity date.
If you still have an outstanding balance by the time your mortgage term comes to an end, you’ll need to renew your mortgage. Your lender will notify you when your term is about to expire so you have plenty of time to renew.
To renew your mortgage, take the following steps:
Even before your lender sends you notification that your mortgage term is going to expire soon, you should take it upon yourself to start shopping around for a mortgage with the best terms and lowest rates.
Find out what the term expiry date is and start doing some research on all mortgage options about 4 months before you’re due to renew. This will give you plenty of time to scope out your options and give you the information you need to negotiate with your current lender. Otherwise, you can renew your mortgage with a different lender who can offer you a lower rate and more suitable terms.
Your financial situation could have changed throughout the duration of your current mortgage term. Maybe things are different for you now, which might mean the current terms and rate of your existing mortgage are no longer be suitable for you.
If that’s the case, you’ll want to factor in any changes in your financial life — such as a raise at work or an upcoming retirement — into your mortgage renewal decision.
Before renewing your mortgage, there are a handful of important things to consider:
The answers to these questions can help you determine whether you’re satisfied with the terms of the mortgage renewal or if you’d like to make some changes.
Once you’ve shopped around and reviewed your finances, it’s time to make a final decision. So, should you accept the offer from your current lender, or should you negotiate new terms? Or, should you work with another lender altogether?
If you are satisfied with what your current lender is offering, simply sign the contract. Otherwise, set up some time to discuss the offer with your lender to negotiate a better offer.
If you decide to switch to a different lender altogether, there is a little more work involved. That includes completing a mortgage application, as a different lender might have different qualifying criteria compared to your current lender.
You might also be charged a few extra fees to make the switch, such as an appraisal fee to have your home’s value appraised by a professional, legal fees, and a discharge fee. Be prepared to cover these extra costs if your new lender doesn’t offer to pay for some or all of these charges on your behalf.
If you choose to stick with your current lender when you renew your mortgage, be sure to inquire about all the fees that might be listed in your contract so that you’re clear about what you’re paying. It’s their obligation to be transparent about how they arrived at the totals listed in the offer.
You might also want to inquire about the interest rate your lender is offering. If rates have recently decreased, consider renegotiating the rate specified in your offer. Even a fraction of a percent can make a difference in the amount of interest you end up paying over the life of your loan.
If you shopped around with other lenders in the months leading up to your mortgage renewal, you might have documentation showing the offers you’ve been given. You can use this information when negotiating with your current lender.
You have the option to work with a different lender when your mortgage term is up rather than staying with your current lender. This is a good option if you’re able to find a better deal somewhere else.
If you choose to switch, your new lender must approve your mortgage application. As such, you’ll need to meet your new lender’s requirements, as mentioned.
As mentioned, there may be charges associated with switching to a new lender. Find out the costs associated with making this change, which can include any of the following:
Your new lender might be willing to cover these costs on your behalf in exchange for their business, but that doesn’t always happen, so be sure to ask.
If your loan amount is high relative to the value of your home, you may be required to pay mortgage default insurance on top of your principal and interest payments.
More specifically, mortgage default insurance is mandatory in Canada if you make a down payment of less than 20% of the home’s purchase price. While you’re required to pay the premiums, the policy is meant to protect the lender and offset any risks if you make a low down payment.
When you switch lenders, you might have to pay a new mortgage loan insurance premium if any of the following applies to you:
Make sure to inform your new lender if you’re already paying mortgage loan insurance on your existing mortgage so you don’t accidentally pay your premiums twice.
When it comes time to renew your mortgage, consider the following tips to ensure a good deal:
If you are nowhere close to paying off your mortgage in full and are not planning to sell your home or refinance your home loan, you’ll have to renew your mortgage. When that time comes, you have the option to stick with your current lender or move over to a new one who can offer you better terms. Either way, do your homework to make sure you’re getting the best deal.
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