Mortgage Renewal · Ontario

A lender typically sends a renewal offer before maturity. That offer is not the only option, and not every lender renews every file.

Many mortgage holders sign what their lender sends without comparing it. Sometimes the offer is competitive and sometimes it is not, and the difference over a term depends on the numbers in front of you. Sometimes a lender does not renew at all, which is a different situation again.

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What's Usually Happening

Three renewal situations worth understanding

The renewal offer arrived

An existing lender sends terms. Whether those terms are competitive depends on what else is available to someone with that qualification profile at that time. Comparing is the only way to find out.

The lender is not offering a renewal

This happens for a range of reasons: credit events, changes in lender policy, or shifts in a file since the original application. A non-renewal creates a deadline, and what can be arranged tends to depend on how much time is left before the maturity date. Addressing it early gives more room.

The situation has changed since you first qualified

Income, employment or credit may look different now than when the mortgage was first arranged. Whether that affects renewal options, and how, depends on where things currently stand and on each lender's criteria.

What Tends to Exist

Renewal options, and what each path involves

Which of these applies depends on the situation, the current lender and the timing. These are the options that commonly come up.

Shopping the Renewal

At maturity a borrower can generally move lenders without a prepayment penalty. Comparing a renewal typically means a new full application, including a credit pull, income verification and a property assessment. Where a situation has not changed much this is a normal process, though what it involves depends on the lender and a full application. The question is whether the difference in terms justifies the effort and the costs of moving.

Non-Renewal Situations

Where a lender is not renewing, what may be possible depends on equity, credit and income. Regulated alternative lenders may consider files that do not meet a chartered bank's criteria, depending on the lender and a full application. Private mortgages are outside the scope of a Level 1 mortgage agent and are not arranged here; a file that appears to fit only a private lender is referred to a licensed mortgage broker at Centum Financial Services Limited Partnership. Addressing a non-renewal further out from maturity generally leaves more room to work with.

Early Renewal or Break-and-Refi

Breaking a mortgage before maturity commonly triggers a prepayment charge; whether one applies, and how it is calculated, depends on the lender and the mortgage contract. A common basis is the greater of three months' interest or the interest rate differential. Whether breaking early makes sense depends on the rate gap, the remaining term and the penalty calculation. It works out sometimes and not others, and the arithmetic belongs before the decision, not after it.

Improving the File Before Renewal

Where renewal is months away, there may be time to address credit, pay down a card balance, or organise income documentation before a new application. What is worth doing depends on the specific issue, and lenders do not all weigh the same things the same way.

Questions

Renewal questions people usually ask

How early can I start shopping a renewal?

Rate holds, where offered, are set by each lender and are not guaranteed. Starting early leaves more time to compare and takes the pressure off the maturity date. An existing lender may also allow an early renewal, though an early offer is worth comparing rather than accepting on its own.

Will switching lenders at renewal require a new appraisal?

Usually yes. A new lender typically requires a current appraisal to confirm property value and establish loan to value. Some lenders use automated valuation models for straightforward properties, which can reduce cost and time. An appraisal is a real cost and belongs in the comparison alongside legal fees and whatever difference in terms is on the table.

What if I can't qualify for renewal anywhere?

Private mortgages are outside the scope of a Level 1 mortgage agent. They are not arranged here, and no rates, fees or outcomes for them are quoted on this site. Where a situation appears to point that way, the file is referred to a licensed mortgage broker at Centum Financial Services Limited Partnership, who is the person accountable for advising on it. What can be looked at here is whether a chartered bank or a regulated alternative lender may be an option first.

Is it worth switching if rates are similar?

Rate is one factor. Prepayment privileges, mortgage features and lender flexibility vary too, and which of those matters most differs from one borrower to the next. Whether another lender may consider a file, and on what terms, depends on the lender's program and a full application. If terms are similar and switching involves legal and appraisal costs, staying may be the better call. The answer depends on the full comparison, not on rate alone.

Other Situations

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