How Long Before Your Mortgage Renewal Date Can You Renew Your Mortgage?

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The Mortgage Renewal Process

If your mortgage term is ending within the next six months and you still have a remaining balance, you will need to either pay off your mortgage, or renew your mortgage or refinance your mortgage to finish paying off your mortgage loan.

Depending on who your mortgage lender is, your lender will automatically send you a mortgage renewal statement anywhere between three weeks to six months before your mortgage is set to renew. The statement will include your balance, interest rate, payment schedule, and any loan conditions.

Most mortgage buyers, and even many homeowners, assume that when the mortgage renewal time arrives, you need to stick with your current lender. That could not be farther from the truth.

What many homeowners and homebuyers do not realize is that they could be saving thousands of dollars worth of interest by negotiating the terms of their mortgage renewal or renewing your mortgage with a different lender in the form of a mortgage switch or mortgage refinance. Switching your mortgage to a different mortgage lender is an option that is definitely worth exploring.

While renegotiating your mortgage terms or switching lenders may sound like an overwhelming process, the savings you might receive could be worth it.

To get the most out of the renewal process, we will be reviewing how lenders assess your mortgage renewal conditions, as well as some tips on how to get the best mortgage rate during the mortgage renewal process.

What Does Your Lender Consider When Renewing?

When your lender determines the terms for your renewal, there are a number of factors that they take into account:

  1. Your Credit Score
    If your credit score has dropped significantly since you first signed your mortgage, your current lender may not be willing to sign you again for another mortgage term. You would likely still be able to find another lender who would be willing to finance your mortgage if you work with a knowledgeable and experienced mortgage broker.
    Bottom line, your bank will check your credit score to renew your mortgage. If your renewal date is coming up in the next few months, work diligently to improve your credit score and pay your credit cards on time and pay back any late fees or other debts that you may have outstanding.
  2. Mortgage Stress Test
    If you renew your mortgage with your current lender, you will not have to undergo the mortgage stress test again. You only need to pass the stress test again if you decide to switch lenders or to refinance your mortgage for a different amount.

How to Renew At the Lowest Mortgage Rate

To make sure that you are qualifying for the most competitive mortgage rate when it comes time to renew, there are a number of considerations you should take into account.

  1. Start to shop around early
    To have access to the best mortgage rates out there, you should start shopping around as early as possible. If your mortgage term is ending within the next six months, you should have already started looking at what other lenders have to offer.
    However, the best time to start your search for a new mortgage is four months before your renewal date, because many lenders will not make you pay any prepayment penalties should you renew 90 to 120 days early.
    Most Canadian homeowners renew with their current lender without checking out what else is on the market. Lenders are constantly competing to offer the best terms, so make an informed choice by weighing all of your options.
  2. Ask for a better mortgage rate
    Your mortgage with your bank will automatically renew on your lender’s own terms unless you negotiate with them.
    Your current lender is well aware that many borrowers are going to renew with the rates and terms set out on the mortgage renewal statement. As such, lenders have little incentive to offer you the most competitive terms they have at renewal time.
    Mortgage renewal terms and mortgage renewal rates are negotiable. Gain leverage with your lender during negotiations by telling them that you are shopping around. They will be more than willing to adjust their terms and mortgage renewal rate once they learn they might lose your business.
  3. Get a rate hold
    During negotiations with your lender, you can lock in an interest rate during the renewal process by getting a rate hold. If the interest rate your lender offers you is low and you feel that interest rates are going to be rising in the future, you can lock in a rate now before rates go up.
  4. Consider Your Financial Goals
    A mortgage is one of the biggest decisions when it comes to your debts and investments that you will make. When life changes, make sure your mortgage terms still align with your financial goals.
    Since you first signed your mortgage, your financial circumstances may have changed. Your income may have increased, you may have more savings, you may have become a primary caregiver, or you might have to pay education costs for your children.
    Make sure you can still afford your mortgage and shop around to find the best mortgage for you.
  5. Renew, Switch, or Refinance?
    Renewing your mortgage with your current lender may not be the best option for you. You can either renew, switch lenders, or refinance your mortgage.
    When you renew your mortgage, you are signing on to a new term with your current lender for the same loan amount and amortization period. Refinancing is when you move your mortgage to a different lender, or when you change the mortgage amount or amortization period with the same lender. A straight mortgage switch is when you are switching your mortgage to a new lender is essentially refinancing your current mortgage with a new lender, but without changing the amount of principal that is being mortgaged.
    The choice between renewing, switching, and refinancing largely depends on your financial circumstances and future plans. If you are satisfied with the service from your current lender, and the renewal conditions and renewal rate they are offering align with your finances well, then renewal may be the best option for you.
    If a different lender is offering you a better mortgage rate and terms, or you need to adjust the amount or amortization period to better fit your financial needs, then refinancing may be a better choice for you.

Renew With Your Mortgage Broker

When facing the decision of renewing your mortgage, start the process as early as possible. Know what your lender will look at to assess your mortgage renewal terms, and use the practical advice of one of our professional mortgage brokers to get the best mortgage rate when renewing.

An expert mortgage broker at Clover Mortgage has access to dozens of lenders, giving you access to a wide variety of mortgage products. Our knowledgeable mortgage brokers can shop around for you with our established connections to over 40 different mortgage lenders, and we can even work to leverage our relationships in the industry to strengthen your negotiations with your current lender. Contact Clover Mortgage today for all of your mortgage renewal and refinancing needs.

Steven Tulman
Written By Steven Tulman
“Making the process of getting a mortgage an easy and enjoyable experience for every Clover Mortgage client!”