Don't Make These 4 Mistakes at Mortgage Renewal

Over 2 million Canadian mortgages come up for renewal every year. And most homeowners make the same costly mistake: they accept whatever rate their bank offers without
shopping around. Here's why that's a problem — and the four mistakes to avoid at your next renewal.

Mistake 1 — Waiting Until Your Renewal Date to Start

Your bank will send you a renewal offer 21–30 days before your term ends. That's not enough time to properly shop the market. Most lenders allow you to lock in a renewal rate
up to 120 days (4 months) before your term ends — at no cost.

Starting early gives you time to:
- Get competing offers from multiple lenders
- Negotiate with your existing lender using those offers
- Transfer your mortgage without rushing (lenders cover legal and appraisal fees on switches)

If you wait until the last 30 days, you're negotiating from a position of weakness.

Mistake 2 — Treating the Renewal Letter as a Final Offer

Your bank's renewal letter is their opening offer — designed to retain you with minimal effort. It is almost never their best rate.

Banks know that most customers will sign out of convenience. By doing nothing, you're leaving money on the table — often $5,000–$15,000 over a 5-year term depending on your
mortgage balance.

A mortgage agent shops your renewal to 50+ lenders and brings you competing offers. Even if you stay with your current lender, having those offers gives you leverage to
negotiate.

Mistake 3 — Focusing Only on the Rate

Rate matters, but it's not the only thing. At renewal, also consider:

- Prepayment privileges — can you make extra payments to pay down principal faster?
- Penalty structure — if you need to break the mortgage early, how much will it cost? IRD (Interest Rate Differential) penalties at big banks can be massive.
- Portability — can you take your mortgage with you if you move?
- Fixed vs. variable — where do rates look like they're heading over your next term?

A lower rate with a harsh penalty structure can cost you more than a slightly higher rate with flexibility.

Mistake 4 — Ignoring the Opportunity to Refinance

Renewal is also the best time to restructure your mortgage with no penalty. Consider:

- Accessing equity — if your home has appreciated, you may be able to pull out equity for renovations, investments, or debt consolidation
- Consolidating debt — rolling high-interest credit card or car loan debt into your mortgage at a lower rate
- Changing amortization — extending or shortening your remaining amortization based on your financial goals

These options are only available at renewal (or by paying a break penalty mid-term). Don't let the opportunity pass without at least considering them.

What to Do Instead

Set a reminder 4 months before your renewal date. Reach out to a mortgage agent who will shop the market for you, present your options clearly, and handle the paperwork — at
no cost to you.

I help homeowners across the GTA renew smarter every year. Book a free consultation 120 days before your renewal and let's make sure you're getting the best possible deal.