Mortgage renewal checklist

1. Gather what you already have

Before any offer arrives, collect the facts about the mortgage you hold now. Most of them are in your agreement and your latest annual statement.

• Your mortgage agreement, including the information box at the start that sets out prepayment privileges and penalties.
• Your latest statement: balance, current rate, remaining amortization and the exact maturity date.
• Whether the mortgage is registered as a standard charge or a collateral charge; a collateral charge can cost more to switch.
• Anything that could change in the next term: a move, a renovation, a lump sum, a change in income or household.

2. Read the renewal statement closely

A federally regulated lender, such as a bank, must give you a renewal statement at least 21 days before the end of your term. If it does not intend to renew, it must tell you at least 21 days before the term ends. Check that the statement includes:

• The balance at renewal.
• The interest rate offered and the term.
• The payment frequency.
• Any charges connected with the renewal.
• A statement that the offered rate won't increase before the renewal date.
• Whether the mortgage will renew automatically if you do nothing.

3. Grade the offer against what lenders actually charged

Enter the offered rate, term and balance in the renewal checker. For a fixed renewal it uses the Bank of Canada's effective rate on new fixed mortgages in the same term bucket, moved by any change in the matching Government of Canada bond yield since that month and labelled as an estimate when moved.

For our household, an offer of 4.79% for five years gets a mark of 67 out of 100 ("grade C"). It sits 0.45% above a best published rate of 4.34%, a gap worth about $7,375 over the 5-year term.

4. Turn any gap into dollars

Now suppose another lender quotes 4.54% in writing. On $350,000 with 20 years of amortization left, 4.79% instead of 4.54% raises the payment by $46.60 a month and adds $4,101 of interest over 5 years. The household would also start the following renewal owing $1,305 more.

Run your own numbers in the rate difference calculator.

5. Count the cost of switching

Switching lenders at the end of a term does not trigger a prepayment penalty, because the term is over. Other costs can apply, and FCAC suggests asking the new lender whether it will cover some or all of them:

• Discharge, registration, transfer or assignment fees.
• An appraisal.
• Administration fees.
• A new mortgage loan insurance premium if the loan amount increases or the amortization is extended.

6. Negotiate, decide and confirm in writing

Our 120-day renewal timeline spaces these steps out over the months before maturity, and the renewal hub gathers the related tools in one place.

• Take your strongest written competing offer to your current lender and ask whether it will match or improve it. The mortgage renewal script has wording.
• Compare the final offers on rate, term, prepayment privileges and penalty method, not on rate alone.
• If you are switching, ask the new lender whether you'll need to requalify, what documents it needs and whether it requires an appraisal. Start early.
• Get the final rate, term and any agreement to cover costs in writing before you sign.
• Note the next maturity date somewhere you'll see it.