How To Get The Most Out Of Your Mortgage Renewal

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When it’s time to renew a mortgage, you may wonder what factors impact the decision and how to find a new provider. Ensure your mortgage continues to meet your changing needs by re-evaluating the terms before renewing with the same term or same lender. 

Renewing may allow you to reduce interest rates, change from fluctuating interest to fixed rates, or adjust your term options to better fit your financial situation. This guide will provide you tips on how to get the most out of your mortgage renewal.

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What Is Mortgage Renewal?

Renewing your mortgage contract is a straightforward and convenient process. Essentially, it’s renewing your mortgage plan with a new term and interest rate if the full amount hasn’t been paid off at the end of the original lending term. The renewed mortgage plan is designed to pay off the remaining balance in your loan. 

You can renew your mortgage multiple times over the life of your loan. When your current mortgage term nears the end, you can expect to receive a letter from your lender with the outlined renewal term. This is the renewal statement that outlines your mortgage balance, term length, and interest rate.

How Does Renewing Your Mortgage Work?

A mortgage term typically lasts five years, you will receive the renewal statement between 21 days or 6 months before the end of your loan depending on your lender. The renewal will give you the opportunity to opt-out of fluctuating interest rates into fixed rates. The fixed rates will be offered for the duration of the new mortgage term.  

If market rates decrease during your fixed term, you may renegotiate to receive a lower interest rate at the end of the mortgage term. When you renew your mortgage, your lender may not offer you a competitive interest rate. Make sure to shop around for lower interest rates or negotiate with your current lender.

Changing Your Amortization When You Renew

Some lenders offer the opportunity to shorten your amortization period with a fee at renewal. If you can afford to pay your mortgage faster, it might make sense to increase your regular monthly payments. This will accelerate the repayment of the loan and reduce overall interest costs.

Should I Switch Lenders For My Mortgage Renewal?

You will need to meet the mortgage lender’s eligibility requirements, and be approved for a new mortgage application if you decide to switch lenders. If you can’t qualify for a new mortgage with current rates, try negotiating with your current lender for lower rates. 

Homeowners could save money by switching lenders when renewing their mortgage, but doing so then incurs the costs of processing and setting up a new account. When switching from one lender to another, you’ll need to incur costs for appraisal of the house, legal fees, mortgage loan insurance premiums and collateral charges. Before switching to a new lender, make sure the interest savings you will see offset any setup costs.

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Tips For Renewing Your Mortgage

If you are considering renewing your mortgage, contact your lender at least three months before the end of your current mortgage term. Doing so not only gives you extra time to explore all of your options, but it also has advantages when you negotiate the interest rates and terms with your lender. Speak to your lender about the monthly payments, mortgage terms and interest rates. 

If you find a cheaper mortgage rate elsewhere, go to your lender and ask them if they are willing to match that lower rate. If not, then explore other lenders who may offer better rates without any penalties. Negotiating an interest rate discount can be difficult and may feel presumptuous, but it’s worth a try.

The best phrases to use are:

"The interest rate is higher than I like, so I'll have to think about it."


"I still have time before my mortgage term is up and the interest rate is higher than what I currently have. So, for now, I'll wait."

Using these phrases will make negotiations with your lender much easier. Your lender will be more likely to offer you a discount on the interest rate.

The Bottom Line

If the time has come for your mortgage to come up for renewal, start considering what you may want to change. Consider increasing your payment frequency or even your payment amount, as this could help you to pay off your mortgage sooner and increase the equity that you have in that account. 

Start comparing rates and terms to find better options. Especially if a renewal notice has arrived, don’t assume that it’s the best deal you may receive. The best way to make sure you are not overpaying for your mortgage is to shop around the renewal offers and find one that better serves your needs.

Compare Rates, And Plan Your Mortgage Today!

We will find a mortgage that allows you to keep more of your monthly income. Whether you prefer a lower monthly payment, a better interest rate, or more equity in your home, we can help you make the best possible decision. With so many types of loans available, our experienced team will find the right option for your situation. Regardless of your credit history, we can find the best loan for you.