Mortgage renewal: five steps starting 120 days before maturity

Why start about 120 days out

A mortgage renewal often arrives as a formality, but it is one of the few moments when your loan is back on the table. The contract reaches its term, nothing holds you any longer, and you can adjust what no longer suits you. You still need the time to do it.

Starting about 120 days before maturity gives each step room: rereading the contract, receiving and reading your lender’s offer, obtaining comparable proposals, negotiating calmly. That window is a guide, not a rule: your contract and your lender may set a different calendar, and it is worth confirming.

The earlier you start, the more choices you have. Conversely, waiting until the last weeks narrows your room to negotiate and the time available to compare, especially if you are considering switching lenders and documents or an appraisal are required.

This article follows the order that works, in five steps. It contains no rates and does not tell you what to decide: it helps you arrive at the discussion with the right documents and the right questions.

Step 1: reread your contract

Everything else depends on it. Take out your current mortgage contract, or ask your lender for a copy, and find a few basic items.

• The maturity date of the term, meaning when your contract’s conditions end.
• The balance still to be repaid, which you can confirm with a recent statement.
• The early repayment terms, and how a penalty would be calculated if you left before maturity.
• The options for switching lenders, any portability and the transfer fees that could apply.

Also note what has changed since you last signed: income, family, plans, tolerance for uncertainty. These will guide what you look for at renewal.

If a passage of the contract is unclear, ask the lender in writing to explain it. Time invested at the start saves many questions later and keeps you from comparing offers without knowing exactly what you are comparing against.

Step 2: recognise the renewal offer

The renewal offer usually arrives a few months before maturity, by mail or online. It is a proposal from your lender, not an obligation. Its aim is to keep you as a client, which is not necessarily unfavourable, but does not guarantee that it is built to give you the widest choice.

Read the terms, not just the first paragraph. An offer should be read in full:

• the length of the term and the type of rate proposed;
• the prepayment and early repayment privileges;
• how any future penalty is calculated;
• fees and special conditions;
• the deadline to respond.

Note the deadline and set a reminder well ahead of it. Do not return anything signed until you have compared: a signature commits you, and a default renewal can carry forward choices made in a different situation.

If an explanation seems vague, ask for it in writing. A serious lender will take the time to restate it.

Step 3: ask for other offers

Without a point of comparison, you are negotiating against yourself. A competing lender or an authorized person can show you alternatives, with the same types of product, so that the comparison stays fair.

To get useful offers, prepare your documents: your current contract, a balance statement and recent proof of income. The exact list depends on the lender, but arriving prepared speeds everything up.

Spell out your needs too: a renovation project, a possible move, a wish for stability or for flexibility. An authorized person, registered with the Autorité des marchés financiers (AMF), can obtain proposals from several lenders and explain the differences.

CompareTaux shows no rates and makes no decision for you: the service routes your request to an authorized person, who contacts you. You have no obligation to follow through.

Ask each person the same question: what is included, what is billed on top, and what happens if my plans change during the term? Written answers are worth more than verbal promises.

Step 4: negotiate

Once you have the offers in hand, show them to your current lender and ask for a response. This is a common and legitimate step. Nothing guarantees that it will adjust its terms, but the discussion is open, especially if you hold comparable proposals.

At renewal, switching lenders often carries little or no penalty, because the contract is reaching its term. That is what makes negotiation possible: your lender knows you have options.

To keep the exchange constructive:

• compare equivalent offers, with the same product type and the same length;
• look at all the conditions, not a single figure: privileges, fees, penalty, portability;
• ask for responses in writing, with a validity date;
• note any transfer, appraisal or notary fees if you switch.

Comparing does not mean leaving. Staying with your current lender may well be the right decision, if it is made knowingly. What matters is not signing by reflex.

Step 5: sign or switch lenders

Decide before the deadline to avoid a default renewal. A default renewal carries forward terms you may not have chosen, sometimes on conditions less suited to your needs of the moment.

If you stay, reread the final version of the contract before signing and check that it matches what was agreed. If you switch, allow time for the paperwork and the appraisal, as well as the steps at the notary’s office. These take longer than people expect, which is why starting early matters.

Whatever you decide, keep a copy of every document exchanged: offers, emails, the signed contract. If a doubt arises later, this file will be valuable, for you as much as for the person helping you.

Once the renewal is signed, note the next maturity date in your calendar, with a reminder a few months ahead. That way, next time, you will start on time, without beginning from scratch.

A hypothetical scenario

Imagine a couple we will call Julie and Marc. Their maturity date is about four months away. They begin by rereading their contract and noting the exact date, the balance and the early repayment terms. They see that no penalty should apply at maturity.

A few weeks later, their lender’s offer arrives. They read it in full, note the deadline and set it aside unsigned. They then list their plans: a possible move in a few years and a wish for some stability in their payments.

With that list, they ask an authorized person to obtain comparable proposals. They read them looking at privileges, fees and portability, then go back to their current lender to ask whether it can adjust its offer.

This scenario is fictional and guarantees no outcome. It simply shows an approach: know your date, name your needs, compare complete offers, negotiate, then decide before the deadline, without pressure.

Common pitfalls

Some mistakes come up often at renewal time. Knowing them lets you avoid them without special effort.

• Signing the offer without comparing, simply because it is there.
• Waiting until the last weeks, which narrows room to negotiate and the time to get other proposals.
• Looking at a single figure and forgetting privileges, fees, the future penalty and portability.
• Not revisiting your amortization and flexibility when your situation has changed.
• Not mentioning an upcoming plan, such as a move or a renovation, that could make the contract unsuitable.
• Confusing comparing with switching: comparing also serves to negotiate, and staying can be the right decision.

None of these mistakes is serious in itself, but they pile up. A conversation with an authorized person, registered with the AMF, helps spot them in your file before the deadline.

A good way to avoid them is to turn these five steps into calendar reminders, set well ahead of maturity, so that time works for you rather than against you.

Checklist and questions to ask

Here is a list to tick off over the weeks, to adapt to your contract.

• I reread my contract and noted the maturity date, the balance and the early repayment terms.
• I received my lender’s offer and noted the deadline.
• I gathered my contract, a balance statement and recent proof of income.
• I asked for comparable offers from another lender or an authorized person.
• I showed those offers to my current lender and got its answer in writing.
• I decided before the deadline and kept a copy of every document.

And a few questions to put to anyone helping you.

• What fees apply if I switch lenders?
• How would the penalty be calculated later?
• Does this offer let me transfer or port the loan if I move?
• Do my term and amortization still suit my situation?

An authorized person registered with the AMF can apply these points to your file, and you have no obligation to follow through.

After you sign

Once the renewal is done, the work is not quite over. File the signed contract with the offers you compared, and note the key dates: the next maturity, the times when extra payments are allowed, the early repayment terms.

Also take a moment to check that the first withdrawal matches what was agreed. An error in amount or date is easier to fix right away than after several months.

Finally, keep in mind that your situation will keep evolving. A change in income, a move or a new project may justify revisiting your options before maturity. An authorized person, registered with the AMF, can help you see clearly, with no obligation on your part.

Frequently asked questions

Sources

• Financial Consumer Agency of Canada
• Canada Mortgage and Housing Corporation (CMHC)
• Autorité des marchés financiers (general public)