Mortgage renewal is the process of extending or renegotiating your mortgage agreement when your current term expires.

At the end of your term, the principal balance of your mortgage is technically due to the lender. However, many Canadians renew their mortgages multiple times throughout the amortization period, which refers to the total time it takes to repay the mortgage in full.

Mortgage terms usually range from a few months up to five years or longer. Depending on your chosen term length, you may find yourself renewing several times before your mortgage is completely paid off. For instance, with a 25-year amortization, you might go through five or more renewals.

When you renew, there’s a good chance that the interest rate and term length will change. You may also have the opportunity to modify other aspects of your mortgage, such as the type of loan or payment frequency.

During your renewal period, you have the option to switch your mortgage to a different lender. This process, known as "switching," is popular for several reasons. Some homeowners switch to access mortgage products their current lender doesn’t offer, while others are attracted by a better customer experience. Most commonly, however, people choose to switch lenders to secure a better interest rate.

That said, switching lenders can involve extra fees. Your current lender may charge a discharge fee (typically up to $400) and, if you switch outside of their renewal window, a prepayment penalty. Your new lender may also charge various setup fees, such as appraisal, assignment, and legal fees—potentially costing up to $500, $300, and $1,500, respectively.

It’s important to weigh these fees against the savings you expect from a better rate. In some cases, it may not make financial sense to switch if the new rate isn’t significantly better than what you could get from your current lender, especially after factoring in the extra costs. At MortgaGen, we make the switching process transparent, so you’ll always know what to expect.

When your mortgage is approaching maturity, your lender will notify you of your renewal options. If you’re working with a federally regulated bank, they are required to give you at least 21 days’ notice before your term ends. Most lenders, including MortgaGen, will reach out to you well in advance—often up to 4 months ahead of maturity.

Your renewal statement will outline the current rates, term lengths, and potential mortgage products available for your next term. After reviewing your options, you simply select your preferences and return the document to your lender for processing.

If you opt to switch lenders, you’ll need to meet the new lender’s application requirements, which may include a mortgage stress test.

At MortgaGen, we simplify the renewal process, making sure you understand your options so you can make the best decision for your financial future.

An early mortgage renewal happens when you renew your mortgage before the end of your current term—sometimes as early as 120 days in advance. Early renewal offers can sometimes include interest rates lower than those posted at the time, making it an attractive option. But keep in mind, you may be able to negotiate an even better deal.

Early renewal is a great opportunity if the offered rates are lower than what you’re currently paying, allowing you to lock in savings ahead of time. However, if the rates are higher, it might be worth waiting to renew—unless you expect rates to rise soon.

Before renewing your mortgage, take the time to assess your financial goals and future plans to ensure your mortgage continues to meet your needs. Remember, it’s not just about getting the lowest interest rate—it’s about finding the right mortgage solution for your current situation.

Ask yourself these important questions before you proceed with your renewal:

• How long do you plan to stay in your home?

• Do you foresee any significant expenses coming up, such as home renovations or buying a new vehicle?

• Do you want more flexibility in making prepayments or paying off your mortgage early?

• Is your mortgage protected with life or critical illness insurance? If not, would you like to add coverage?

• How satisfied are you with your current lender, and can they offer you a competitive rate?

• What rates can you secure elsewhere, and are your current lender’s options competitive?

By addressing these questions, you’ll be well-prepared to make the best decision when it comes time to renew.

If you don’t sign your renewal agreement before your mortgage term expires, your lender may automatically renew your mortgage at a higher interest rate, often on an open term. While this allows you flexibility to exit the mortgage, it may result in higher interest costs.

Some lenders may automatically renew your mortgage into a closed fixed-rate agreement, which could lock you into a higher rate and come with penalties if you try to switch lenders.

In rare cases, your mortgage lender may choose not to renew your mortgage. This can happen if you’ve missed payments or if there are concerns about your financial situation after reviewing your credit history. If this occurs, it’s important to understand your options, such as switching lenders or speaking with a mortgage broker who can help you explore alternative solutions.