Your Mortgage Renewal Offer Arrived. Here’s What to Check Before Signing

A mortgage renewal offer can look like an administrative task: choose a term, accept a rate and carry on. It is also a chance to check whether the next contract fits the next stage of your life.

This guide is general education, not a recommendation to choose a particular lender, rate or mortgage type. Offers, eligibility and costs depend on your circumstances and contract.

Start before the deadline

For mortgages with federally regulated financial institutions, the Financial Consumer Agency of Canada says a renewal statement must arrive at least 21 days before the existing term ends. That is a disclosure deadline, not a reason to postpone shopping around. [1]

Put the maturity date in your calendar. Ask what happens if you take no action, and request enough time to compare written offers.

Compare the same mortgage, not just the headline

Use the same balance, remaining amortization and payment frequency when comparing quotations. Record the rate, term, estimated payment, fees and balance expected at the end of the term. Ask which figures are estimates and which terms are guaranteed.

A term is the period your contract runs. Amortization is the longer repayment schedule. Confusing the two can make a lower payment look like a better deal when it mainly reflects a longer repayment period. FCAC explains that extending amortization generally lowers payments but raises total interest, other things being equal. [2]

Ask for a comparison that keeps your existing repayment schedule before considering an extension.

Fixed or variable: test your budget

With a fixed rate, the interest rate stays the same during the term. With a variable rate, it can change. Payment arrangements vary: some variable mortgages adjust the payment, while others hold it steady subject to contractual limits. Ask your lender to explain the specific arrangement in writing. [3]

Instead of relying on a rate prediction, ask for payment illustrations at the offered rate and at higher rates. Then consider how much room remains for ordinary living costs and unexpected expenses. These are planning scenarios, not forecasts.

Flexibility matters if your plans change

If a move, sale or large repayment is possible, ask about portability, qualification requirements and prepayment privileges. How much extra can you pay, when can you pay it, and what happens beyond that allowance?

Breaking a closed mortgage early or exceeding its privileges may trigger a penalty. FCAC describes calculations involving three months' interest or an interest rate differential, depending on the contract. Do not assume a generic online formula matches your lender's method. Request an explanation and a current estimate for your own mortgage. [4]

Separate switching at renewal from breaking early

Changing lenders when a term ends is different from ending the contract before maturity. Either way, ask for an itemized list of applicable discharge, registration, appraisal, legal or administrative costs, and written confirmation of any costs the new lender covers. FCAC advises comparing the full cost of available options rather than the rate alone. [1,5]

Confirm approval requirements directly. A quotation is not the same thing as final approval.

Questions to send your lender

• Is this your best available renewal offer for my situation?
• What is the payment using my current remaining amortization?
• What extra payments are permitted without penalty?
• What could I owe if I sell or refinance during the term?
• Which fees apply, and who pays them?
• Are any optional products included in this quotation?
• What must I do, and by what date, to accept or decline?

Keep the answers together. The useful comparison is the contract you can understand, afford and live with—not just the smallest number in the advertisement.