Time to Renew Your Mortgage? Here are a Few Tips to Help!

If you have a mortgage, you’ll likely be renewing it at some point in time. A mortgage renewal is the process of taking your existing balance and renewing it for another term at a new (and hopefully lower) mortgage rate.


If you don’t already have your maturity date (the date your mortgage term ends) marked on a calendar, you’ll know it’s time to renew when you receive a renewal slip in the mail from your current mortgage provider. The slip includes a new rate and term offer, which you can sign and send back. However, it’s always a good idea to take a more proactive approach. Here are our top tips for ensuring a smooth mortgage renewal process:


Have your goals changed from when you first got your mortgage?  Consider your current financial goals!


When you get your mortgage renewal slip, review your financial goals first. Your current lender may not offer the product that best suits your needs. For example, if your current mortgage term is a five-year fixed rate, the renewal slip will likely be for another five-year fixed. 


If you think you’ll stay in your home for that amount of time, great. But if you know there’s a chance you’ll downsize or potentially move to a new city in the next few years, you may want to look for a three-year product instead.


In addition to pre-payment options, consider how an inheritance may affect your financial goals. For example, would you benefit from refinancing your mortgage or getting a home equity line of credit? Knowing what you need in a mortgage can help you choose between different lenders and products.


Don’t wait until the last minute


It’s possible to renew a mortgage early. While you’re still several months away from the maturity date of your mortgage, it’s a good idea to start the renewal process now.


Your current lender will likely send you a renewal notice sometime in the last 30 days of your mortgage term. To ensure you’re ready, find the maturity date on your mortgage contract (it may also be visible through online banking) and count 120 days back on a calendar.


If you can’t negotiate a better offer with your current lender, you may want to consider switching providers. If you want to switch your mortgage over before the actual renewal date, a mortgage broker can help you find an alternative.


Get a better interest rate


Lenders use little mortgage renewal slips to make it too easy for you to renew your mortgage by providing a quick and easy way to renew. They know you’re busy and will pay for this convenience. 


On average, mortgage providers only offer their existing customers a discount off their posted rate on a renewal slip. But this isn’t the lowest possible rate, even from your current lender. There are usually lower rates available from other lenders.

Mortgage renewal is a good time to negotiate for a better rate. Here’s how much you could save by asking for a better rate on a $300,000 mortgage with a 20-year amortization.


Your mortgage is due next month, and you have agreed to a five-year fixed rate at 2.74%. Your current lender may offer you a discount of 0.25% off the posted rate for a new rate of 4.89%.


If you were to take out a five-year fixed rate mortgage at 2.94%, your monthly payments would be $1,652.13. That is $301.47 less than if you were to qualify for a monthly payment of $1,953.60 on a variable rate mortgage.


Lock in a rate hold


 When shopping for a mortgage, it’s a good idea to use a mortgage broker. Rather than having to go from lender to lender yourself, your mortgage broker can pull your credit report once and then find a list of lenders who will work with you along with the best rates they can offer. A mortgage broker will easily be able to tell you what rate you could qualify for if you choose to switch lenders.


Your mortgage broker can help you find the best rates for your situation and negotiate with your current lender to match that rate. If you’re not ready to make a decision, for example, if you want a chance to let your current lender match that rate, ask your mortgage broker for a rate hold. 


Rate holds protect you from interest rate increases for up to 120 days. If interest rates go down during that time, don’t worry, you can negotiate down to that new lower rate too. Rate holds lock in the rate if you’re worried rates will rise before you’re up for renewal.


You may want to switch lenders, so be sure to give yourself time


If you’re thinking about switching lenders, you may be wondering how early you should start the process of remortgaging. The answer is as early as possible. You’ll need to submit a mortgage application as though you are applying for a new mortgage, which means you’ll need to provide documentation including:

  • A copy of your mortgage renewal letter

  • Current mortgage statement

  • Proof of your income

  • Proof you currently own the home

  • Proof you have property insurance

Mortgage brokers usually need 10 – 15 days (or more)  or more process your application, so make sure you leave plenty of leeway between when you start the process and when your mortgage is due to renew. Otherwise, you could end up being stuck with your current lender at a less than optimal rate for your next mortgage term.


Why you should always compare mortgages…not just rates


While it may seem like a lot of effort to shop around for a new lender, saving a few percentage points off your mortgage rate could help you avoid financial vulnerability. This vulnerability is due to something called ‘interest rate risk’. Interest rate risk occurs when your mortgage is expected to renew at a higher rate, putting more financial strain on your budget. During the pandemic, many highly indebted Canadian households took advantage of historically low rates and took on mortgages, which in turn subjected them to interest rate risk.


Interest rate risk is a concern for homeowners in Canada, who may face three scenarios where interest rates rise quickly:

  • Rising interest rates will affect you immediately if you’re on a variable rate

  • If on a fixed rate, your mortgage is coming up for renewal

  • If you have a HELOC with a variable interest rate

When you’re choosing between renewing your mortgage at a higher rate or refinancing to access equity, hundreds of dollars could be the difference between paying down debt and just making ends meet. For this reason, it’s important to shop around for the best mortgage rate—your financial prosperity depends on it.


Learn more about refinancing


Renewing your mortgage can be quick and easy with your current lender. However, by following these tips, doing your research, and working with a mortgage specialist like myself,  who can provide you with mortgage renewal advice and tips, you’ll get the best lender, terms, and rate for your current financial situation.


How can Ahmad, mortgage specialist at AskAhmad.ca and the Total Mortgage Source 360 Team help you?

Ahmad and his team are industry experts on mortgages. They offer excellent customer service and pride themselves on their ability to help you find the right mortgage product for your needs.

We can offer you some of the most competitive interest rates and mortgage products available because we have access to Canada’s leading lenders, including banks, mortgage firms, trust companies and private lenders. 

Want to learn more about how Ahmad can help you secure your mortgage? Reach out today to get the conversation started!  Ready to apply for your FREE mortgage pre-approval?  Click HERE 

Total Mortgage Source 360  FSRA#12151 – Each office is independently owned and operated 

Ahmad El-Farram, Mortgage Agent #M21005249

The Mortgage Centre at Total Mortgage Source 360 

License #12151


Your Local Aurora/Newmarket Mortgage Agent

M: 647.992.4411

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