Your Guide to Mortgage Renewal in Canada

Renewing your mortgage is an essential step in your financial journey, especially for homeowners in Calgary, Alberta. At Concourse Mortgage Group, we understand that the renewal process can seem daunting, but it’s a crucial opportunity to reassess your financial goals and secure a mortgage that best suits your current needs. In this comprehensive guide, we answer key questions and provide valuable insights to help you navigate the mortgage renewal process confidently.

What is a Mortgage Renewal?

A mortgage renewal is the process of renegotiating the terms of your mortgage when your current term expires. In Canada, most mortgages have a term of five years, though terms can vary. When your term ends, you’ll need to either renew your mortgage with your current lender or consider switching to a new lender. The goal is to find the most favorable terms for your financial situation.

Key points about mortgage renewals:

Time to Reevaluate: A mortgage renewal is an excellent opportunity to reassess your financial situation, compare rates, and potentially negotiate better terms.
Not Automatic: While most lenders will offer a renewal, it’s essential to be proactive to ensure you get the best deal.
Renewal Offer: Your lender will typically send you a renewal offer about 120 days before your mortgage term expires.

Government of Canada – Mortgage Renewal

When Should I Start My Mortgage Renewal?

The ideal time to start considering your mortgage renewal is four to six months before your current term expires. This gives you ample time to explore your options, negotiate terms, and make an informed decision.

Why start early?

Early Renewal Offers: Lenders often send renewal offers 120 days (about four months) before your term ends. Starting early allows you to compare offers from other lenders.
Interest Rate Fluctuations: Mortgage rates can change, and starting early gives you the flexibility to lock in a favorable rate.
Avoiding Last-Minute Stress: Procrastination can limit your options and potentially leave you with less favorable terms.

Steps to start your mortgage renewal:

Review Your Current Mortgage: Understand your existing terms, including your interest rate, payment schedule, and remaining balance.
Research Market Rates: Compare current mortgage rates to see if you can find a better deal elsewhere.
Consult a Mortgage Broker: A broker can provide access to multiple lenders and help you navigate the renewal process.
Negotiate with Your Lender: If you’re happy with your current lender, don’t hesitate to negotiate better terms or ask for perks such as reduced fees.

Why Are Mortgage Renewal Rates Higher?

Mortgage renewal rates can sometimes be higher than the original rate you secured when you first took out your mortgage. Several factors contribute to this increase and understanding them can help you make better decisions during the renewal process.

Factors influencing higher renewal rates:

Market Conditions: Economic factors, such as inflation and changes in the bond market, can lead to higher interest rates.
Bank of Canada Policies: The Bank of Canada’s interest rate decisions directly impact mortgage rates across the country.
Lender Profit Margins: Lenders may increase rates to maintain profitability, especially if they anticipate future market volatility.
Risk Assessment: Your lender may reassess your financial situation at renewal, leading to a higher rate if your credit score has decreased or if you have accumulated more debt.

How to mitigate higher renewal rates:

Shop Around: Don’t feel obligated to stick with your current lender. Compare rates from multiple lenders to find a better deal.
Improve Your Credit Score: A higher credit score can qualify you for better rates. Consider paying down debts and ensuring timely payments before renewal.
Consider a Mortgage Broker: Brokers can help you access more competitive rates by comparing offers from different lenders.

Can a Mortgage Company Refuse a Renewal?

While it’s rare, a mortgage company can refuse to renew your mortgage under certain circumstances. Understanding why this might happen and what you can do about it is crucial.

Reasons for refusal:

Significant Changes in Financial Situation: If your financial situation has worsened significantly, your lender may view you as a higher risk.
Missed Payments: A history of missed or late mortgage payments can lead to a refusal.
Negative Equity: If your home’s value has decreased significantly, leaving you with negative equity, the lender might refuse to renew.
High Debt Levels: If your overall debt level has increased substantially, the lender may be hesitant to renew.

What to do if your renewal is refused:

Consult a Mortgage Broker: A broker can help you explore alternative lenders who may be willing to take on your mortgage.
Improve Your Financial Situation: If possible, take steps to improve your credit score, pay down debt, and ensure you’re current on all payments.
Consider a Private Lender: If traditional lenders are not an option, a private lender might be willing to renew your mortgage, albeit at a higher rate.
Refinance Before Your Term Ends: If you anticipate difficulties at renewal, consider refinancing before your term expires to secure more favorable terms.

How to Ensure a Smooth Mortgage Renewal Process

The mortgage renewal process doesn’t have to be stressful. By being proactive and informed, you can secure the best terms for your next mortgage term.

Steps for a smooth renewal process:

Start Early: Begin the renewal process 4-6 months before your term ends to give yourself ample time to explore options.
Review Your Financial Situation: Assess your current financial standing and determine your mortgage needs moving forward.
Research and Compare: Don’t settle for the first renewal offer. Compare rates and terms from different lenders.
Negotiate: Don’t be afraid to negotiate with your current lender for better terms.
Seek Professional Advice: Consulting with a mortgage broker can provide valuable insights and access to better rates.

Benefits of working with Concourse Mortgage Group:

Expert Guidance: Our team in Calgary is well-versed in the local mortgage market and can guide you through the renewal process.
Access to Multiple Lenders: We work with a network of lenders to help you find the best rates and terms.
Personalized Service: We take the time to understand your unique financial situation and tailor our services to meet your needs.

Local Focus: Serving Calgary’s Mortgage Needs

At Concourse Mortgage Group, we pride ourselves on being a part of the Calgary community. We understand the unique challenges and opportunities that homeowners in Alberta face. Whether you’re renewing your mortgage for the first time or the fifth, our team is here to help you navigate the process with confidence.

Why choose Concourse Mortgage Group?

Local Expertise: We understand the Calgary housing market and can provide insights that are specific to our region.
Community Commitment: We’re dedicated to serving our community, and our services are designed to support Calgary homeowners.
Tailored Solutions: Every homeowner’s situation is unique, and we offer solutions that are tailored to your specific needs.

Conclusion: Take Charge of Your Mortgage Renewal

Mortgage renewal is a critical step in your financial journey, and it’s important to approach it with a clear understanding of your options. At Concourse Mortgage Group, we’re here to support you every step of the way. Whether you’re looking to secure a better rate, switch lenders, or simply need advice, our team is ready to assist.

The Vital Role of Mortgage Renewals