What Should I Do When My Mortgage Comes Up for Renewal?
Do not automatically sign the renewal offer from your existing lender. A mortgage renewal is an opportunity to review the entire mortgage, compare your options and make sure the next term still fits your finances and plans.
← Back to Mortgage Strategy QuestionsReview the Mortgage Before You Sign Another Term.
Your existing lender's renewal offer may be competitive, but you should not assume it is your best option. Review the rate, term, penalties and flexibility, then compare what else is available before committing to another mortgage term.
Review the Renewal Offer
Look at the interest rate, proposed term, payment and other conditions your current lender is offering.
Compare Other Lenders
Your existing lender is only one option. Compare other available mortgage products before deciding whether to stay or switch.
Reconsider Fixed vs. Variable
The rate structure that made sense during your last term may not be the right choice for the next one.
Review the Term Length
Choose a term that fits what you expect to do with the property and mortgage rather than automatically repeating your previous term.
Look at Penalties and Flexibility
If you may sell, move or refinance, the cost of breaking the mortgage and its portability provisions can matter as much as the rate.
Start Before Maturity
Switching lenders or refinancing can require qualification and documentation, so the review should begin before the mortgage is already due.
Renewal Is Also a Good Time to Look at the Rest of Your Finances.
Simply renewing means continuing the mortgage balance into a new term. Refinancing changes the mortgage and can potentially allow you to access equity, consolidate debt or restructure the financing.
If your financial situation has changed, it makes sense to review whether renewing the existing balance is still the best strategy.
Changes in property value and mortgage balance may have created additional equity since your last term began.
Renewal can be an opportunity to determine whether consolidating expensive unsecured debt would improve monthly cash flow.
If income or expenses have changed, the mortgage structure should be reviewed rather than simply carried forward.
Moving, retiring, renovating or accessing equity can all affect which mortgage structure makes sense for the next term.
The Lowest Renewal Rate Is Not Automatically the Best Mortgage.
A small rate difference can be outweighed by an expensive penalty, restrictive terms or a mortgage that does not fit what you are likely to do during the next term.
Interest Rate
Compare the actual rates available for the term and mortgage structure you are considering.
Mortgage Payment
Understand how the new rate and amortization affect the required monthly payment and household cash flow.
Prepayment Privileges
If you expect to pay the mortgage down faster, compare how much additional principal each mortgage allows you to repay.
Early-Payout Penalty
Understand how the lender calculates the penalty if you need to break the mortgage before maturity.
Portability
If you may move, review whether the mortgage can be transferred to another property and under what conditions.
Qualification
If you want to switch lenders or refinance, changes in income, credit or debt can affect which options are currently available.
Treat Renewal as a Mortgage Review — Not an Automatic Signature.
Sometimes staying with your existing lender is the right decision. But make that decision after comparing the rate, term, penalties, flexibility, equity position and other financing options available to you.
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