How early can you renew your mortgage?

Renewing your mortgage is a part of owning a home and making monthly mortgage payments. But what is mortgage renewal? Most mortgages have a mortgage term. As you reach the end of this term length, you'll need to meet with your lender and renegotiate your existing rate and payment frequency.

This begs the question, how early can homeowners in Canada apply for a mortgage renewal? Are there any penalties for renewing your mortgage early? To learn more, keep reading through our intro to mortgages and renewals below!

How far in advance should I renew my mortgage?

Your current lender is legally required to inform you that it's time to renew your mortgage 21 days before the mortgage term ends, and you'll receive a renewal letter in the mail. That said, you are still able to go through an early mortgage renewal before the end of your mortgage term if you want to secure a lower rate or are thinking about changing to a new lender.

It's important to note, however, that should you choose to renew your mortgage before your renewal time, you could incur penalties. So, if you're thinking of renewing before your next mortgage term has expired, make sure you contact your current mortgage lender for more information on these specific penalties.

Pros and cons of the early mortgage renewal process

If you're considering going through the mortgage renewal process early, it's important to know what the pros and cons are of doing so. What happens when you renew mortgage terms early? Take a look below:

Pros of early mortgage renewal

• In a rising-rate environment, an early mortgage renewal can help you save money and lock in a lower interest rate, which will help you lower your monthly payments until your renewal date comes up once again.
• Because your current lender will want to keep you as a customer, it's likely they'll give you a promotional early renewal offer that may be lower than what other lenders are currently offering.
• Giving yourself more time before your mortgage matures offers the opportunity to shop around for the best interest rate by changing lenders.

Cons of early mortgage renewal

• If you renew early, you could miss out on a lower mortgage rate that is offered elsewhere or at the time when your maturity date actually arrives.
• You may face early renewal penalties like additional fees.

How early can you renew a fixed-rate mortgage?

Most lenders will allow you to renew your fixed-rate mortgage fourto six months before your actual renewal date arrives.

Tips for your mortgage renewal

If you want to make the most of your mortgage renewal and potentially lower your monthly payment, here are some tips to consider beforehand:

Consider your financial goals

Consider your financial situation and financial goals. Is your lender offering you a more affordable rate that reflects your current finances?

Shop around for different mortgage rates

It doesn't hurt to shop around for different interest payments if possible. Sometimes, staying with the same lender may not be the best decision, given that there are better interest rates elsewhere.

Consider working with a mortgage broker

Working with a mortgage broker gives you the flexibility to compare mortgage offers from different lenders and choose one that meets your needs.

When can I remortgage without penalty?

While you're able to renew your mortgage at any time, if you wish to do so without getting a penalty from your current lender, you'll need to wait until your offer letter arrives in the mail. This letter will usually be issued 21 days before the end of your mortgage renewal date.

This letter will outline your current mortgage payments and interest rate and go over the new terms and conditions of your new rate offered. Note that you are not inclined to accept the offer if you do not want to. A lower rate may be available elsewhere, and homeowners should consider shopping around for a new mortgage product if it works with their current finances.

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Whether you've got an existing mortgage, are first-time home buyers, or have further questions about the difference between home insurance vs. homeowners insurance, BrokerLink is here to help.

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If you've entered a mortgage contract for the first time and wish to protect your property, are thinking about changing house insurance in general, or want to know more about an insurance discount for home alarm systems, contact BrokerLink to learn more about our different home insurance including:

• Mortgage insurance
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FAQs

What is hazard insurance on my mortgage?

Hazard insurance is a type of home insurance that protects your finances in the event your property is damaged as a result of specified perils listed in your insurance policy. Although home insurance isn't mandated by law, your insurance lender may require you to purchase insurance at the time of your mortgage application.

What's the difference between a mortgage renewal and mortgage refinance?

A mortgage renewal suggests that you are able to continue paying monthly mortgage payments to your lender. On the other hand, you may refinance your mortgage if you need to borrow more money.

Will my mortgage payments go down after my mortgage renewal?

Not necessarily. Renewing your mortgage is something all homeowners need to go through at least once. However, it doesn't mean your mortgage payments will decrease. It depends on what lenders are offering and whether you're able to secure a lower interest rate at the time of your renewal.

What is an amortization period?

An amortization period is the length of time it will take you to pay off the entirety of your mortgage.

If you have any questions, contact one of our local branches.