What to review before renewing your mortgage

A renewal is the simplest moment to change lenders, and often the cheapest. Your renewal letter is one offer. Before you sign it, it's worth checking what else is available and whether the terms still suit your plans.

1. Start about four months early

Many lenders will hold a rate for up to 120 days. Starting about four months before your maturity date gives you time to compare options without being rushed into the first offer.

2. Know your numbers

Have these ready:

• your maturity date and current lender,
• the balance you'll owe at maturity,
• your remaining amortization,
• your current rate and payment.

3. Compare more than the rate

Two offers at similar rates can work very differently. Compare:

• Term length, and how it fits your plans to move, sell or refinance.
• Prepayment privileges, meaning how much extra you can pay each year without a penalty.
• Penalty calculation, especially for fixed rates, where an interest rate differential can be large.
• Portability, if you might move during the term.
• Fixed or variable, and how much payment change you can comfortably absorb.

4. Understand switching

At maturity you can move your mortgage to another lender without a prepayment penalty. Since November 2024, federally regulated lenders generally don't apply the stress test to a straight switch, where the balance and amortization stay the same.

There may be costs, such as a discharge fee from your current lender and legal or appraisal fees. Many lenders cover some of these for switches, so ask before deciding.

5. Decide whether you need a refinance instead

A renewal keeps the mortgage the same. If you want to borrow more, consolidate debt or extend your amortization to lower the payment, that's a refinance. A refinance means qualifying again, including the stress test, and federally regulated lenders generally cap it at 80% of the home's value.

Extending the amortization reduces the payment but increases the total interest paid. Use the payment calculator to see the difference for your mortgage.

6. Read the renewal agreement before you sign

Confirm the rate, term, payment, payment frequency and any changes to the terms. If you do nothing, some lenders renew automatically, sometimes into a short term at a less favourable rate.

This article is general information about mortgage renewals in Ontario, not legal or financial advice. Lending rules and lender policies change; confirm current requirements before relying on them.