If your mortgage is coming up for renewal, you may be wondering what happens next, whether your payments will increase, and whether you should stay with your current lender. For homeowners in Maple Ridge, BC, and throughout the Fraser Valley, a mortgage renewal is an important opportunity to review your finances and consider your future housing plans.
In Canada, most homeowners with a conventional closed-term mortgage must renew their mortgage when their current term expires, unless they pay off the balance or make other arrangements. Your lender will generally provide renewal information before your maturity date, giving you an opportunity to review your options.
However, renewing your mortgage isn’t just about choosing a new interest rate. It’s also an opportunity to decide whether your current home still fits your lifestyle, financial circumstances, and long-term goals.
Let’s look at what happens when your mortgage comes up for renewal and what you should consider before signing a new agreement.
1. Your Current Mortgage Term Comes to an End
When you first obtained your mortgage, you agreed to an interest rate and a mortgage term. Common terms include one, two, three, and five years.
When that term expires, your mortgage reaches its maturity date.
If you still owe money on your mortgage, you will generally need to renew it, refinance it, transfer it to another lender, or repay the outstanding balance.
It’s important to understand the difference between your mortgage term and your amortization period.
• Mortgage term: The period during which your current mortgage contract applies.
• Amortization period: The total length of time scheduled to repay your mortgage in full.
For example, you could have a 25-year amortization period but a five-year mortgage term. At the end of those five years, you may still have many years of mortgage payments remaining.
Your renewal allows you to establish new mortgage terms for the next period.
2. Your Mortgage Lender Will Offer Renewal Options
As your mortgage maturity date approaches, your lender will generally provide information about renewing your mortgage.
The offer may include a proposed interest rate, a new mortgage term, and payment details.
Although accepting your lender’s offer may be convenient, it doesn’t mean you have to accept it without comparing your options.
Before renewing, consider:
• Asking your existing lender whether a better rate is available.
• Comparing offers from other mortgage lenders.
• Reviewing fixed and variable interest rate options.
• Checking the proposed mortgage term.
• Confirming your new payment amount.
• Asking about fees and any conditions that apply.
If you decide to change lenders, you may need to complete additional paperwork and meet the new lender’s qualification requirements.
Starting early gives you more time to compare options without feeling rushed.
3. Could Your Mortgage Payments Increase at Renewal?
One of the biggest concerns homeowners have is whether their mortgage payments will increase.
If your current interest rate is lower than the rate offered at renewal, your payments could rise. However, the actual amount depends on several factors, including your outstanding mortgage balance, interest rate, remaining amortization period, and payment frequency.
For example, a homeowner who secured a particularly low interest rate several years ago may face higher payments when renewing at a higher rate.
On the other hand, if the available rate is lower than the homeowner’s current rate, the payments may decrease, depending on the other mortgage terms.
Before signing a renewal agreement, ask your lender to calculate your proposed payments.
It’s also wise to review your overall household budget. Property taxes, utilities, insurance, maintenance, and other living expenses should be considered alongside your mortgage payment.
4. Should You Choose a Fixed or Variable Mortgage Rate?
Your mortgage renewal is an opportunity to review whether a fixed or variable interest rate better suits your needs.
Fixed-rate mortgage
A fixed-rate mortgage generally keeps the interest rate unchanged throughout the agreed term.
This can make budgeting easier because you know the applicable interest rate for that period.
Variable-rate mortgage
A variable-rate mortgage has an interest rate that can change in response to the lender’s applicable benchmark or prime rate.
Depending on the mortgage product, changes may affect your payments, the amount of interest you pay, or how quickly you repay the principal.
Neither option is automatically better for every homeowner.
Consider your financial stability, tolerance for interest-rate changes, and plans for the future. A qualified mortgage professional can help you compare the available products.
5. Should You Renew With Your Existing Lender or Switch?
You may be able to renew with your current lender or transfer your mortgage to another lender.
Staying with your current lender may be simpler, but another lender could offer terms that better suit your circumstances.
When comparing options, look beyond the advertised interest rate.
Consider:
• The interest rate and mortgage term.
• Any lender, legal, appraisal, or administrative fees.
• Qualification requirements.
• Prepayment privileges.
• Portability options.
• Penalties for ending the mortgage early.
• The total cost over the term.
If you are considering switching lenders, ask about the requirements and costs before making your decision.
The goal is to find a mortgage that fits your financial situation and future plans, not simply the lowest advertised rate.
6. What If You Want to Sell Your Home Before or After Renewal?
This is an important consideration that homeowners sometimes overlook.
If you’re thinking about selling your home, downsizing, or moving to another community, consider your real estate plans before committing to a new mortgage term.
Selling a property before the end of a closed mortgage term may result in a prepayment penalty. The amount depends on your mortgage agreement and lender.
Some mortgages also offer portability, which may allow you to transfer your existing mortgage to another property, subject to the lender’s conditions and approval.
Before renewing, ask your lender:
• What happens if I sell my home before the new term ends?
• What prepayment penalty could apply?
• Can I transfer my mortgage to another property?
• Would a shorter mortgage term make sense?
• Are there options that offer greater flexibility?
These questions are particularly important if your circumstances may change over the next few years.
Is your home still right for you?
Your mortgage renewal may prompt you to think about whether staying in your current home is the best decision.
Perhaps your children have grown up, your household income has changed, or you would prefer a smaller property with lower maintenance costs.
You may also be considering moving closer to family, relocating for work, or purchasing a different type of home.
Before making a decision, consider both your mortgage obligations and the potential costs of selling and purchasing another property.
7. What If You Can No Longer Afford Your Mortgage Payments?
If your financial circumstances have changed, your mortgage renewal may feel stressful.
Perhaps your income has decreased, your expenses have increased, or your current payments are becoming difficult to manage.
Don’t wait until your mortgage maturity date to start discussing your options.
Contact your lender early and ask what solutions may be available. Depending on your circumstances, you may wish to discuss different mortgage terms, refinancing, or other arrangements.
Extending an amortization period may reduce payments in some circumstances, but it can increase the total interest paid over time. Refinancing may also involve qualification requirements and additional costs.
If you are struggling financially, consider speaking with a qualified mortgage professional or financial adviser to understand your options.
8. What Happens if You’re Separating or Divorcing When Your Mortgage Renews?
For homeowners who are separating or divorcing, mortgage renewal can involve additional decisions.
You may need to determine whether one spouse can afford to keep the family home, whether a buyout is possible, or whether selling the property is the most practical option.
If both spouses are named on the mortgage, renewing it does not automatically remove either person from their obligations.
Similarly, transferring ownership of a property does not, by itself, necessarily release a spouse from responsibility under the mortgage. The lender’s approval and appropriate legal arrangements may be required.
Before renewing a mortgage during separation or divorce, consider obtaining independent legal advice and speaking with a mortgage professional.
You may need to review:
• Whether either spouse can qualify to carry the mortgage alone.
• Whether refinancing is possible.
• Whether one spouse can buy out the other’s interest.
• Whether selling the marital home is a better option.
• How the mortgage and property expenses will be handled while decisions are being made.
In British Columbia, family-property rights and mortgage obligations are separate issues that may require professional advice.
Making informed decisions early can help you understand your options and avoid committing to arrangements that do not fit your future circumstances.
9. When Should You Start Preparing for Mortgage Renewal?
It’s wise to begin reviewing your mortgage several months before your maturity date.
Here is a general timeline to help you prepare.
Six months before renewal
• Check your mortgage maturity date.
• Review your outstanding balance and household budget.
• Consider your future housing plans.
• Begin researching mortgage options.
Three to four months before renewal
• Contact your current lender.
• Compare available rates and terms.
• Ask about switching lenders, refinancing, and associated costs.
• Discuss your options with a mortgage broker if appropriate.
One to two months before renewal
• Review your preferred mortgage offer.
• Confirm the payment amount and contract conditions.
• Complete any required paperwork.
• Make sure you understand the consequences of ending the mortgage early.
Your lender’s policies and your circumstances may affect this timeline, so confirm when you can begin the renewal process.
Make Your Mortgage Renewal Part of Your Bigger Plan
When your mortgage comes up for renewal, you have an opportunity to review your finances and decide what makes sense for your future.
For some homeowners, renewing with their existing lender will be the right choice. Others may benefit from comparing lenders, exploring refinancing, or considering a move.
If you own a home in Maple Ridge, Pitt Meadows, or the surrounding Fraser Valley, reviewing your mortgage alongside your housing plans can help you make a more informed decision.
Wondering whether to renew your mortgage and stay put, or sell your home and move?
Understanding your property’s current market value is a useful starting point.
As a REALTOR® with Royal LePage Wolstencroft, I help homeowners understand their real estate options and prepare for their next move.
Mortgage Series
What Homeowners Need To Know Before Renewing Their Mortgage In BC