5 Tips to Renew Your Mortgage

You may be one of the millions of Canadians who will renew their mortgage in the coming year in a much higher interest rate environment. This is a good time to review your mortgage needs and make sure you have the right mortgage product. It is important to remember that you have options when you renew your mortgage. Here are 5 tips that can help you renew a mortgage that meets your needs.

Tip #1: Review your mortgage needs.

Before you renew your mortgage, take the time to review your mortgage needs and make sure you have the right product.

To help you find the right mortgage, consider whether:

your budget allows you to increase your payments to pay off your mortgage sooner and save on interest
you want to change your payment frequency
you’re likely to make additional payments
you’re satisfied with the services offered by your current lender
you want to consolidate other debts that have higher interest rates and increase the amount of your mortgage
you still need optional life, critical illness, disability, or employment insurance

If your lender is a federally regulated bank or credit union, they must offer and sell you products and services that are appropriate for you, based on your circumstances and financial needs. They also must tell you if they’ve assessed that a product or service isn’t appropriate for you. Take the time to describe your financial situation to ensure you get the right product. Don't hesitate to ask questions and make sure you understand the mortgage you have or want.

Tip #2: Shop around.

You don’t have to renew your mortgage with the same lender. You can move your mortgage to another lender if their conditions better suit your needs. Start shopping around a few months before the end of your term. Contact various lenders and mortgage brokers to check if they offer mortgage options that would work better for you. Don’t wait until you receive the renewal letter from your lender.

Tip #3: Negotiate a better interest rate.

Negotiate with your current lender. You may qualify for a discounted interest rate that is lower than the rate quoted in your renewal letter. Tell your lender about offers you received from other financial institutions or mortgage brokers. You may need to provide proof of the offers you receive. Make sure you have this information on hand.

If you don’t take action, your mortgage term may be automatically renewed. This means you may not get the best interest rate and conditions. If your lender plans on automatically renewing your mortgage, it will say so in the renewal statement.

Tip #4: Switch to another lender.

You may decide to switch your current mortgage to another lender for a loan of the same amount. If this is the case, the new lender will need to approve your mortgage application. The new lender may use different criteria than your original lender to decide if you qualify for a mortgage.

Make sure you find out the costs of changing lenders, such as:

setup fees with the new lender, which may include discharge, registration, transfer and/or assignment fees from your current lender
an appraisal fee to confirm the value of your property (if necessary)
other administration fees

Ask if your new mortgage lender is willing to pay for some or all your costs to switch.

You may have to pay a new mortgage loan insurance premium when you switch lenders.

You may have to pay fees if your mortgage is registered with a collateral charge.

Tip #5: Learn about your mortgage-relief options.

FCAC expects federally regulated institutions to help you if you're struggling to pay your mortgage due to exceptional circumstances. If you’re at risk of defaulting on your mortgage and you’re renewing your mortgage, your bank or credit union is expected to:

make sure the terms and conditions of the renewal are appropriate for you and consider your circumstances and financial needs
not offer you a less advantageous interest rate when you’re unable to:
- adjust your current mortgage agreement
- qualify with other mortgage lenders