What You Need to Know About Mortgage Renewal: A Step-by-Step Guide


So, the term of your current mortgage is coming to a close and it is fast approaching time to renew for the remaining balance on the house. This is a great time to honestly and closely assess your financial situation at the end of a mortgage term, compared to the beginning of it, and make wiser decisions with your money. In this brief guide, we’ll show you how to stay on top of things and act proactively when it comes time to renew.

Step 1: Research Your Options Months Ahead of Time

Roughly four months before the term on your mortgage comes to an end, most lenders will allow you to renew your mortgage early and without prepayment penalties. This is perfect for when you want to stay with the same lender and have them handle your mortgage renewal.

If you want to gain a deeper understanding of what your options are but are not quite ready yet to sit down with your current or any new lender, it still doesn’t hurt to shop around. Look online to see what other lenders are offering. See how their terms stack up in comparison to your current lender’s. You might decide that you want to renew your mortgage with someone new.

Another thing to consider is a type of mortgage you have. First or primary mortgages are very different from Toronto second mortgages that are usually issued by private lenders.

Step 2: Assess Your Financial Situation

A lot can happen between the beginning of a mortgage term and the end of one. You may have gotten a raise, gotten a new job with higher or lower pay, had a child, sent a child to college, or invested in any number of large and important expenses. Now is a great time to sit down and make a detailed note of your expenses and income. It is also time to consider whether you want to access any of your home’s available equity.

Step 3: Determine What You Need from Your Mortgage

Ask yourself these questions when figuring out what your new mortgage needs are:

  • “Can I increase my mortgage payment amounts with my elevated income?”
  • “Will I be getting any funds, like an inheritance, that I can put toward my mortgage payments?”
  • “Am I considering moving out of the house I’ve got the mortgage on?”
  • “Is it possible for me to pay off my entire remaining mortgage during this next term?”
  • “Do I think I’ll be borrowing more money from this lender?”

The answers to these questions will alter how you should go about renewing your mortgage, so consider them carefully and answer yourself honestly.

Step 4: Be Prepared to Renew

Within the final 30 days of your mortgage term, you should have done enough research to know if the offered conditions of your lender are optimal for renewal. You should have shopped around and gained an understanding of what other lenders have to offer. If you are considering changing lenders, now is a great time to sit down with a mortgage broker.

Step 5: Finalize Your Decision

Who is offering you the best rate? Is it your current lender or somebody else? Switching lenders will require some paperwork, while sticking with your current lender is a fairly easy and straight-forward process. If your aim is to switch lenders, you should also be aware of any additional fees that might be charged to you for doing so. Such charges could be new appraisal fees, discharge fees, assignment fees, and other legal fees. Be prepared to pay these expenses as they apply to your situation.

Mortgage renewal isn’t a terribly complicated process, but the help of a mortgage broker can help demystify what remains unclear and get you into a loan with the best possible rates.

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