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| Insured ? | 80% LTV ? The rates in this column apply to mortgage amounts between 65.01% and 80% of the property value. The home must be owner-occupied and have an amortization of 25 years or less. You must have purchased it for less than $1 million. These rates are not available on refinances. Refinances require "Uninsured" rates. | 65% LTV ? The rates in this column apply to mortgage amounts that are 65% of the property value or less. The home must be owner-occupied and have an amortization of 25 years or less. You must have purchased it for less than $1 million. These rates are not available on refinances. Refinances require "Uninsured" rates. | Uninsured ? | Bank Rate ? | ||
|---|---|---|---|---|---|---|
Insured 5.04% | 80% LTV 5.15% | 65% LTV 5.15% | Uninsured 6.63% | 6.29% | ||
Insured 4.74% | 80% LTV 4.79% | 65% LTV 4.74% | Uninsured 4.74% | 5.59% | ||
Insured 4.14% | 80% LTV 4.14% | 65% LTV 4.14% | Uninsured 4.49% | 4.89% | ||
Insured 4.29% | 80% LTV 4.14% | 65% LTV 4.14% | Uninsured 4.49% | 4.74% | ||
Insured 3.99% | 80% LTV 3.99% | 65% LTV 3.99% | Uninsured 4.14% | 4.59% | ||
Insured 4.44% | 80% LTV 4.39% | 65% LTV 4.39% | Uninsured 5.9% | 5.5% | ||
Insured 5.09% | 80% LTV 5.29% | 65% LTV 5.29% | Uninsured 5.8% | 7.14% | ||
Insured 4.6% | 80% LTV 4.7% | 65% LTV 4.6% | Uninsured 4.6% | 6.85% | ||
Insured 4.3% | 80% LTV 4.5% | 65% LTV 4.3% | Uninsured 4.3% | 4.65% | ||
Insured N/A | 80% LTV N/A | 65% LTV N/A | Uninsured N/A | N/A | ||
Insured 5.25% | 80% LTV 5.25% | 65% LTV 5.25% | Uninsured 5.25% | N/A |
Every mortgage comes with a fixed time-period, usually one year to five years or sometimes more. At the end of the term and as long as you owe a balance amount to the lender, the mortgage can be renewed.
When you are nearing the end of your existing mortgage term, your lender will approach you 30 days ahead of the term ending to renew your term or pay-off your mortgage in total. In the first scenario, where you decide to renew your mortgage term with the existing lender, you will be provided with a renewal form which you'll have to fill up and return to the existing lender before the term ends.
If you decide to shop around for a better mortgage interest rate with other financial institutions, you will have to prepare yourself for a slew of checks. Any new lender who will offer you a mortgage rate will go through your credit history, do a stress test as well as check your income and debt situation. The renewal process could also take a few days, so it is advisable to prepare for this two- to three-months in advance. Some of the checks you will be subjected to, in the case of going with a new lender, are credit history, income stability, employment status, loan-value of the property, debt-to-income ratio, among other checks. The lender will also do a mortgage stress test on you, which requires a borrower to qualify at a 5.25% rate or contractual mortgage rate plus 2%, whichever is higher.
If you find a better rate with a new lender, you can always go to your existing lender to negotiate or match the rate and improve upon the term. They may be willing to adjust the interest rate or offer other incentives to retain your business.
Switching to a new lender could mean additional paperwork, and some fees for making the switch, including appraisal fee to verify the property’s value, discharge fee, legal fee, and an assignment fee. The borrower must prepare to pay this fee when you start your new mortgage or totally avoid this by negotiating with the existing lender.
To qualify for mortgage renewal, your mortgage term must be coming to a close with your existing lender. In Canada, it is imperative upon your lender to notify you of your mortgage term ending 30 days in advance. However, that does not stop you from researching who’s offering better rates in the market and that would also allow you to negotiate with your existing lender when the time comes.
Any new lender will do a mortgage stress test to assess your financial situation and how much mortgage you are eligible for. To qualify for a mortgage stress test, you must be able to pay your mortgage at either 5.25% or the contractual mortgage rate plus 2%, whichever is higher. A bank can disqualify you and refuse to give mortgage if you fail the stress test, so it is best to meet a mortgage broker to check if you could qualify or use our stress test calculator.
Yes, a financial institution like a bank or other lenders can deny you mortgage loan if you don’t pass mortgage stress test or you do not qualify based on other requirements like employment status, loan-to-debt ratio, credit history, etc. The lender doesn’t have an obligation to renew your mortgage — either upon the terms you request, or at all.
If you’ve demonstrated that you’re an irresponsible mortgage holder, your lender can cancel your mortgage contract. If you are denied, you can apply with a new lender. But keep in mind that you’ll probably need to pass a stress test in order to qualify.
That said, renewing your mortgage should be straightforward if you’ve proven that you’re a responsible borrower. Here are some tips for getting your mortgage renewal approved:
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It is not odd to confuse the terms mortgage refinance and mortgage renewal because of how often they are used in the mortgage world. However, these are two separate processes and have different requirements.
Mortgage renewal like discussed above, is the process of extending your existing mortgage for another term. Mortgage refinance, on the other hand, is replacing your existing mortgage with a new one to change the terms, access funds, or achieve other financial goals.
| Refinance | Renewal |
|---|---|
| Refinancing involves replacing an existing mortgage with a new one. | Renewal happens when your existing mortgage term comes to an end. |
| Refinancing could mean you will be changing your lender, depending on the interest rates offered to you. | At renewal, you could continue to be with the existing lender by signing a new agreement, after negotiating your interest rate and terms. |
| Refinancing could be done to access the equity of the home or secure better mortgage terms and a lower interest rate. | Renewal does not involve accessing equity of the home, but you can negotiate the mortgage terms and interest rate. |
Being prepared before going in for mortgage renewal is important because a lot of factors can impact your mortgage terms and rate. Here are a few tips to keep in mind when shopping for mortgage renewal:
Shop around to find the best mortgage rates available in the market. A rates aggregator like LowestRates.ca can help you identify the lowest possible rates from 50+ banks and lenders in Canada. You could also connect with a professional mortgage broker who could provide access to multiple lenders and help you find the best rate.
Your existing lender will notify you by mail about your mortgage term coming to an end 30 days in advance. However, if you want to shop around and look for better rates and mortgage terms, it is advisable that you start 2-3 months in advance or connect with a mortgage lender who can help you in the process.
Missing your mortgage renewal deadline would have severe consequences on your financial history and it could impact your credit score. Besides, if you miss your mortgage renewal deadline you might miss the opportunity to negotiate for a cheaper rate and would have to work around with the standard rate available, which could impact your monthly payments adversely. Missing your mortgage renewal or refinancing with a new lender, may cause you to pay penalties or fees. These penalties can include prepayment penalties, administrative fees, or other charges associated with breaking your existing mortgage contract.
The timeline for a mortgage renewal will vary by lender. That said, it’s a good idea to get things rolling about 120 days, or 4 months, in advance of your mortgage renewal date, because there’s a good amount of paperwork to complete. It’s best to leave yourself lots of time to get everything organized and preapproved so it’s a seamless transaction. Some lenders might even let you start the process as early as 150 days before your mortgage’s maturity date.
You might be wondering when you’re able to renew your mortgage. The earliest that most lenders will allow you to start the mortgage renewal process is 120 days, or 4 months, from your mortgage renewal/maturity date. This is known as an early mortgage renewal and typically, there is no early mortgage renewal penalty.
If you try to break your mortgage in the middle of your term, you may have to pay a penalty, known as an interest rate differential (IRD).
There are several steps for a mortgage renewal, and one of those steps is typically a credit check done by your lender to determine whether or not you qualify for a renewal. But keep in mind that your lender already has access to your credit score, since you would have had a hard credit check done at the time you got the mortgage.
Your credit rating may have an impact on the interest rate you’re offered by your lender, among other terms of the renewal. So it’s best to keep your credit rating in good standing by making all your bill payments on time.
While there’s no “mortgage renewal fee” per se, there are fees associated with renewing your mortgage in Canada, particularly if you change lenders, such as:
As well, if your mortgage was insured and upon renewal your mortgage loan amount or amortization period increases, you might get charged a mortgage insurance premium. If you previously had mortgage insurance with your old lender, let your new lender know to avoid being charged this fee.
All of this information, as well as everything that’s in the original mortgage contract, should be spelled out clearly on the mortgage renewal notice you receive. Make sure you fully understand the terms and conditions before you sign a mortgage renewal agreement.
If you own and have a mortgage for a rental property, you can deduct certain fees related to your mortgage, according to the Government of Canada. But if this is the home you own and live in yourself, then no you can’t deduct fees associated with mortgage renewal.
Yes. The bank, or any other lender for that matter, doesn’t have an obligation to renew your mortgage — either upon the terms you request, or at all. If you’ve demonstrated that you’re an irresponsible mortgage holder, your lender can cancel your mortgage contract. If you are denied, you can apply with a new lender. But keep in mind that you’ll probably need to pass a stress test in order to qualify.
That said, renewing your mortgage should be straightforward if you’ve proven that you’re a responsible borrower. Here are some tips for getting your mortgage renewal approved:
Shivani Kaul
About the Author
Shivani Kaul is a content manager in the personal finance space. Prior to this, she worked as a digital editor with Pagemasters North America (a division of The Canadian Press) for four years. Shivani has also worked as a freelance writer and editor for Investor's Digest of Canada and The Ghost Bureau.
She has more than a decade of experience working as an editor and writer for different news media organizations in Canada and South Asia. She has a Digital Marketing Management certification from the University of Toronto, a Master's degree in Mass Communication (Journalism) and a Bachelor's degree in English from the University of Delhi (India).
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