Renew It or Lose It

Is it time to renew? Here's how to keep track of your term's end.

Not sure when your mortgage matures? It's a good idea to keep track — especially if you have a complicated relationship with time (aka it flies too fast for your liking). Don't rely on your lender to notify you with enough time for a renewal process that prioritizes your needs and savings. If your mortgage contract expires, your lender will profit from the chaos.

Where can you find your mortgage renewal (maturity) date? 

• On your original mortgage commitment
• On your annual mortgage statement
• Typically available in your online mortgage account.

If you're unsure, call your bank rep for the exact date.

When you find your renewal date, mark 4 months ahead on your calendar, which is when you can technically re-sign or switch lenders without paying a penalty to break your term.

Or, set up a friendly reminder with our free renewal reminder tool — and you'll get a notice that your mortgage is now in its renewal window.

Think your renewal will be fast? Take a moment to review your needs.

The easiest and fastest renewal process is to auto-renew with your current lender, provided you're happy with the rate and options offered for your next term.

But be careful that you're not readily accepting a higher rate or more restrictive conditions.

Have your mortgage or financial needs changed? Your situation is unique — and you may want a mortgage that fits your life as it is now, or for what you're planning next, versus where you were a few months or years ago when you last signed with your lender.

For example, you may want to:

• Tap into your home equity through a refinance or by adding a HELOC
• Save more over your next term (take our Save & Compare calculator for a spin)
• Get certain flexible features that help your goals or that you wished you had last term
• Extend your amortization
• Switch lenders for your best deal

Needing or wanting changes can take more time, or there may be complications that can delay your renewal process for any number of valid (or human-fallible) reasons.

What happens if you miss your renewal date?

You're likely to pay more and stress more.

Your mortgage contract will lapse into an open or closed term at a much higher rate if your current lender doesn't receive a signed renewal agreement, or the mortgage isn't paid out on or before the maturity date.

The higher rate is due to both the admin hassle the lender takes on and the extra costs to carry your mortgage in the interim.

The length and terms of the interim mortgage will depend on the lender, with the most common ones being:

• A 6-month or 1-year closed convertible term at Prime +3% or 4%
• An open variable-rate term at Prime +3% or 4%

The lapse means you might also spend needless time dealing with the details and ensuring your mortgage contract gets back on track (banks can be a tricky bunch if you or an expert broker is trying to blow an airhorn to get things moving).

So, it makes sense to keep track of your renewal date to help ensure a smooth and stress-free process.

What's the difference if you lapse into an open, closed, or convertible mortgage?

An open mortgage allows you to make changes at any time, such as a larger pre-payment than is typically allowable or choosing a different rate type (variable vs. fixed mortgage rate) without incurring a penalty. Not all lenders offer this product for your interim renewal lapse, but if they do, you won't be locked into paying a higher rate for a set time. You'll be able to transition to your mortgage of choice once the renewal process finalizes.

A closed mortgage means you can't make significant changes without breaking the 'new' contract, and you'll pay a pre-payment penalty if you choose not to wait out the interim term to renew into a better mortgage product.

A convertible mortgage is a closed mortgage that retains a penalty for most major changes, but allows the flexibility to convert to a longer term or different rate type.

How much time should you allow for your renewal process?

Is your mortgage contract with a federally regulated financial institution, like a bank or non-bank lender? It must provide you with a renewal offer (also called a renewal statement) at least 21 days before the end of your existing term.

Ideally, however, you should give yourself at least a month for your renewal process to help ensure you won't hit any snags that could result in additional time needed to resolve them.

Have you suddenly realized your mortgage renewal date is close at hand? Don't panic! Contact an expert True North broker, and we'll do everything possible to help expedite your process. Don't just auto-accept your renewal offer, thinking there's not enough time.

How far in advance can you renew your mortgage?

You can typically start the mortgage renewal process up to 4 months (120 days) before your current term ends, allowing you ample time to explore options and potentially secure a better rate or mortgage. An early renewal typically means breaking your term, though you may be able to get a blended mortgage rate, depending on the lender and your situation.

If you haven't received your renewal offer yet (it may be sitting in your online account), contact your lender for the statement.

Related Topic: How much will it cost to break your mortgage?

Is it better to renew your mortgage right away or wait?

Ultimately, deciding whether to renew at the start of your 4-month renewal period or wait a little longer depends on your personal financial goals and risk tolerance. 

If you think rates may be going up, renewing on the earlier side can help you avoid added interest costs. On the flip side, if you think rates may decrease, waiting until 4-6 weeks before your renewal date may provide the opportunity to get a lower mortgage rate.

How a True North broker helps you watch rates during your renewal period:

• We're independent and salaried (non-commissioned) for unbiased advice
• We have access to several lenders and products, even from your bank
• We can source your best option and monitor the market
• We may be able to negotiate an even better rate before the funding date

Not having to watch rates yourself is one of the most compelling reasons to contact a True North broker right away.

Can a bank refuse to renew a mortgage in Canada?

In most cases, as long as you've made all your payments on time, there's no immediate reason to think your current lender would deny your mortgage renewal. 

But yes, your lender isn't obligated to offer you a renewal and may decide not to. In this case, the lender must notify you at least 21 days before the end of your term.

A lender's reasons for not renewing a mortgage can include:

• Significant changes in your financial or credit situation
• Despite previously approving your mortgage, it may carry too high an LTI (loan-to-income) ratio due to recent changes in traditional criteria
• You've shown difficulty making your mortgage payments on time

Instead of denying you a renewal contract, you may instead face a much higher mortgage rate to stay.

If your bank doesn't renew — what are your options?

If you're unable to renew with your current lender or are facing a significantly higher rate, consider consulting an expert broker with access to several alternative and private lenders that may be able to extend a mortgage approval.

At True North, our expert brokers have the speed and flexibility to source the right mortgage solution at your best possible rate — ideally, in time for the mortgage maturity date.

If you need a short-term mortgage solution to see you through, you can work with your broker to get back with a traditional (A) lender for your next renewal.

You may have a good reason for allowing your mortgage renewal date to lapse.

You may be comfortable with the temporary higher rate and term, especially if you're lapsing into a short-term open or convertible mortgage, both of which allow you to forego a penalty by signing to a longer term.

• You're about to pay off your mortgage in full (with a closed convertible mortgage, a prepayment penalty will apply)
• The delay is due to moving homes, and the extra cost will be absorbed in the transaction (as per the following reason)
• The renewal-lapse term is replacing the need for a bridge mortgage
• The accepted lapse is due to personal or financial reasons (e.g. travel, divorce, or medical issues)

Your expert broker is the wake-up call you need.

If hitting the '10 more minutes' button is your thing, we suggest applying online or calling a highly trained True North mortgage broker as soon as possible in your renewal period to ensure your mortgage doesn't sleep past better rates or options.

We rise early and grind the lenders and rates so you don't have to. We've been here for almost two decades, garnering an impressive number of 5-star reviews, offering you a better (savings) choice (in your preferred language) than silently signing with your bank.

Wherever you are in Canada, wake up to a better renewal deal — online, over the phone, or by email. Or stop by a True North store for fresh coffee and friendly, in-person help.