When your mortgage term ends, you’ll face a decision that can shape your finances for years: do you renew with your current lender or switch to a new one? While renewing might seem like the simplest option, it’s not always the most cost-effective. Canadian homeowners exploring mortgage renewal options should weigh both paths carefully.
Switching Lenders or Renewing? What Canadian Homeowners Should Know
Mortgage renewal in Canada typically happens at the end of your mortgage term, which is usually every 1 to 5 years, depending on your contract. You’ll receive a renewal offer from your current lender, and if you don’t respond by the deadline, your mortgage may be automatically renewed, often at less favourable terms. This period is an opportunity to reassess your goals, compare offers, and negotiate better rates.
What Happens During Mortgage Renewal in Canada
Renewing a mortgage in Canada means negotiating a new term for your existing loan. The default process is fairly straightforward: if you do nothing, your lender may automatically renew your mortgage with new terms, often without the best rate. But you have the right to renegotiate.
If you’re satisfied with your lender and they offer a competitive rate, renewal can be convenient. However, overlooking the opportunity to explore better deals could cost you in the long run.
Pros of Renewing with the Same Lender
Renewing with your current lender comes with clear benefits. It’s quick, requires little paperwork, and usually doesn’t involve requalifying for the mortgage. You may also receive loyalty perks, such as matching competitor rates or waiving certain fees. For homeowners who value simplicity, this can be an appealing route.
Cons of Staying with the Same Lender
Despite the convenience, some lenders auto-renew at rates higher than what’s available in the market. Because there’s no requirement to requalify, many borrowers don’t shop around. This can lead to missed savings and reduced flexibility. Failing to compare mortgage renewal options could mean locking into an unfavourable rate or outdated terms.
Pros of Switching Lenders
Switching gives you the chance to secure better interest rates or mortgage features, such as improved prepayment privileges, portability, or amortization terms. It’s an opportunity to align your mortgage with new financial goals, whether that’s paying off faster or lowering monthly payments.
Cons of Switching Lenders
On the downside, switching lenders requires requalification, including submitting updated financial documents. You may also face fees for appraisals, legal adjustments, or discharges. Not everyone qualifies, especially if your financial situation has changed since the last term.
How to Decide: Renewal vs. Switch
Start your research early, ideally 120 to 30 days before your mortgage matures. Compare offers from multiple lenders and evaluate how each aligns with your current financial priorities. If your income, expenses, or goals have changed, switching might open better paths. If your situation is stable and your current lender offers a strong rate, renewing may be just right.
How Northwood Mortgage Supports Your Renewal or Switch
Northwood Mortgage helps you navigate the complexities of mortgage renewal in Canada. Our advisors provide personalized rate comparisons and help you determine whether renewing or switching aligns best with your financial future. We handle the paperwork, streamline the process, and help you make the most informed decision.
Don’t Settle at Renewal Time; Explore Your Mortgage Options
Your mortgage renewal in Canada is more than a formality; it’s a financial opportunity. Take time to compare, ask questions, and explore what’s out there. With the right guidance, renewing a mortgage in Canada can be a chance to improve your rate, lower your payments, or secure more flexibility.
Reach out to Northwood Mortgage today at 888-495-4825 or click here to get in touch online.
