Mortgage Renewal: Why You Should Never Just Sign What Your Bank Sends

About 60 days before your mortgage term ends, you'll get a letter from your bank. It'll offer you a renewal rate and ask you to sign and return the form.

Don't do it.

That letter represents the bank's first offer — and it's rarely their best. Banks know most people will just sign and return it because it's easy. They're counting on your inertia.

Why Shopping Your Renewal Matters

Let's say you owe $400,000 and have 20 years left on your amortization. The difference between a 5.00% rate and a 4.75% rate over a 5-year term:

That's nearly $5,000 saved — just by spending an afternoon shopping rates instead of signing the first offer.

When to Start

Start shopping 120 days (4 months) before your maturity date. Most lenders will lock in a rate for 90-120 days, giving you time to compare without pressure.

If rates drop after you lock in, many lenders will give you the lower rate. If rates rise, you're protected. It's a one-way bet in your favor.

Your Three Options at Renewal

1. Negotiate With Your Current Lender

Call your bank and tell them you're shopping around. Often they'll improve their offer. Have competing rates ready to reference.

2. Switch Lenders

At renewal, you can switch to a different lender without penalty. The new lender often covers legal and appraisal costs through a "switch" program.

Switching makes sense when:

• Another lender offers a significantly better rate
• You want different mortgage features (prepayment options, portability)
• You've had poor service with your current lender

3. Refinance (Different from Renewal)

Refinancing means breaking your current mortgage and getting a new one — typically to access equity, consolidate debt, or change your loan amount. This isn't the same as a renewal and may involve fees.

Beyond the Rate: What Else Matters

The lowest rate isn't always the best mortgage. Consider:

• Prepayment privileges: Can you make extra payments without penalty?
• Portability: Can you transfer the mortgage if you move?
• Penalty calculation: If you break the mortgage early, how is the penalty calculated?
• Blend and extend: Can you refinance mid-term without full penalties?

Fixed vs. Variable at Renewal

Renewal is a good time to reconsider your rate type:

• Fixed rate: Payment certainty, protection from rate increases
• Variable rate: Historically lower total interest paid, but payment can change

The right choice depends on your risk tolerance, how long you plan to stay, and where you think rates are headed. There's no universally right answer.

Common Renewal Mistakes

• Waiting until the last minute: You lose negotiating leverage when you're rushed
• Only talking to your current bank: You have no comparison point
• Focusing only on rate: Terms and features matter too
• Not using a mortgage broker: Brokers shop dozens of lenders at once, for free
• Signing without reading: Make sure you understand the terms you're agreeing to

How a Mortgage Broker Helps

When you work with me on your renewal, I:

1. Shop 50+ lenders to find the best rates available to you
2. Compare not just rates, but terms and features
3. Handle all the paperwork for switching lenders if needed
4. Negotiate with your current lender on your behalf
5. Provide this service at no cost to you (lenders pay my fee)

Your renewal is one of the biggest financial decisions you'll make every five years. Taking a few hours to shop around can save you thousands. Don't just sign what your bank sends.