Your lender sends a renewal letter a few months before your term ends. It has a rate, a term and a signature line. Signing it takes two minutes, and that convenience is exactly what it is priced for. Here are the five things I see homeowners in Waterloo Region do at renewal that cost them, and what to do instead.
1. Signing the first letter
The rate on the renewal letter is an opening offer, not a final one. Your lender knows that most people sign without asking, so the first number is rarely their sharpest. You are a known, paying borrower. That is worth something, and you are allowed to ask what else they can do before you look elsewhere.
2. Starting too late
Most lenders will hold a rate for 90 to 120 days. That means the useful window to compare is about four months before your maturity date, not four weeks. Start late and you run out of time to switch, so you take whatever is in front of you. If you don't know your maturity date, it is on your annual statement or in your bank's app.
Want the nudge?
Tell me your renewal month and I'll reach out four months before, once. Set a renewal reminder. No email required.
3. Assuming switching is expensive
At maturity there is no penalty to leave your lender. If you switch a straightforward mortgage to a new lender at renewal, the new lender often covers the usual legal and appraisal costs. Ask, because it varies by lender and by product, but "it costs too much to move" is usually an assumption, not a quote.
4. Renewing the same mortgage you had five years ago
Your life probably changed since you signed. Renewal is the one moment you can change amortization, payment frequency, prepayment room or term length with no penalty. If you are expecting a bonus, an inheritance or a sale, prepayment privileges matter. If money is tight, a longer amortization lowers the payment. Renewing "as is" without thinking about it is a choice, and often not the right one.
5. Skipping the stress-test question
Since late 2023, borrowers switching an insured mortgage to a new lender at renewal have generally not had to re-qualify under the stress test, and in late 2024 that was extended to uninsured straight switches as well. Rules and lender policies change, so confirm what applies to you, but do not assume you are stuck because you would not pass a stress test today. Many people are more portable than they think.
What to do this month
- Find your maturity date.
- Four months out, get your renewal letter and at least one outside comparison.
- Decide what you want to change: term, amortization, prepayment room.
- Then sign, wherever the right fit is. Sometimes that is your current lender.
I compare renewal offers against dozens of lenders for homeowners across Ontario. There is no cost to you for a comparison, and no obligation.
This article is general information, not financial advice, and quotes no rates. Your situation may differ; speak with a licensed mortgage professional.