Mortgage Renewal — Don't Just Sign the First Offer

Why You Should Never Auto-Sign Your Renewal

When your mortgage term ends, your lender will send you a renewal letter, typically 30 to 60 days before your maturity date. The letter will contain a new rate and an invitation to sign and return the form. Many homeowners simply sign and send it back without comparing other options, and this is one of the most expensive mistakes in personal finance. Lenders know that most borrowers will take the path of least resistance, and the rates offered in renewal letters often reflect that assumption. The rate on your renewal letter is almost always negotiable, and in many cases, another lender will offer a meaningfully lower rate or more favourable terms. Ajay Bhanot helps homeowners across British Columbia take advantage of this window by comparing their renewal offer against the broader market, entirely at no cost to the borrower.

The 120-Day Renewal Window

Most lenders allow you to begin the renewal process up to 120 days before your maturity date. This four-month window is important because it gives you time to lock in a rate hold with a new lender while still keeping your options open. A rate hold means the lender guarantees a specific rate for a set period, even if rates increase before your maturity date. If rates decrease during the hold period, many lenders will adjust your rate downward. Starting the process early gives Ajay time to submit your application, obtain an approval from the new lender, and arrange the legal transfer, all without rushing to meet a deadline. Waiting until the last minute limits your options and may force you to accept your current lender's offer simply because there is not enough time to complete a switch.

Switching Lenders at Renewal Costs You Nothing

One of the least understood facts about mortgage renewals in Canada is that switching lenders at the end of your term costs you nothing. There is no prepayment penalty because your term has ended. The new lender covers the legal and administrative costs of the transfer in most standard switch transactions. The only exception is if your mortgage has a collateral charge registration (common with certain banks) rather than a standard charge. In that case, a full discharge and re-registration may be required, which can involve modest legal fees. Ajay reviews your mortgage documents to determine whether you have a standard or collateral charge and advises on any costs before you commit to a switch.

What to Negotiate at Renewal

Renewal is your opportunity to renegotiate every aspect of your mortgage. The interest rate is the most obvious factor, but it is not the only one. You should also evaluate the term length. A five-year fixed term may offer stability, but a three-year term could make sense if you plan to sell or refinance before five years are up. Prepayment privileges matter as well: can you make lump sum payments of 15%, 20%, or 25% annually? Can you increase your regular payments? These options give you flexibility to pay down your mortgage faster if your income increases. Payment frequency is another lever. Switching from monthly to accelerated bi-weekly payments results in the equivalent of one extra monthly payment per year, which can shave years off your amortization. Ajay evaluates all of these factors when comparing renewal options and presents a clear recommendation based on your current goals.

Rate vs. Term: Choosing the Right Combination

The interplay between your interest rate and your term length is a critical decision at renewal. Shorter terms (one to three years) typically carry lower rates but expose you to rate risk sooner when you need to renew again. Longer terms (four to five years) provide payment certainty but may come at a premium. Variable-rate mortgages, where your rate fluctuates with the lender's prime rate, have historically cost less than fixed rates over time, but they require comfort with payment variability. Ajay discusses your risk tolerance, timeline, and financial goals to help you select the combination that fits your situation. There is no universally correct answer. The right choice depends on your personal circumstances, and that is exactly why a one-on-one consultation is valuable.

This Service Is Free for Borrowers

When you work with Ajay for a mortgage renewal, there is no fee charged to you. The receiving lender compensates the broker when a mortgage is placed or transferred. This means you receive a professional comparison of your renewal offer against 30-plus lenders at absolutely no cost. Whether you ultimately switch lenders or decide to stay with your current one at a negotiated rate, the consultation and rate comparison are free. Given that even a small rate difference of 0.15% on a $500,000 mortgage saves approximately $750 per year, the value of a broker comparison at renewal is substantial and the cost to you is zero.