What is mortgage renewal?
If the borrower still has an outstanding balance on their Mortgage at the end of their Mortgage term, he/she will have to Renew their Mortgage term for another term.
If the borrower’s Mortgage contract is with a Federally regulated financial institution, the lender must provide the borrower with a Renewal Statement at least 21 days prior to the end date of the existing term.
Most lenders also allow the borrower to Renew with them anytime in the final 120 days of the current Mortgage term, without having to pay a penalty for breaking the term early. This is known as an early Mortgage Renewal.
The Renewal Statement must contain the same type of information that is in the borrower’s current Mortgage contract, such as:
- Balance or principal remaining at the Renewal date
- Interest Rate
- Payment Frequency
- Any charges or Fees that may apply
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Can I renew my mortgage with some other lender?
Yes, the borrower can move his/her Mortgage to another lender if it offers better terms and conditions. Borrowers should start shopping around a few months before the end date of their Mortgage term (Maturity Date). However, switching lenders can involve some costs like Set-up Fees, a Transfer or Assignment Fee, a Property Appraisal Fee and any other Administration Fees.
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How to get the best rate at the time of
Mortgage renewal In Ontario?
To get the best Mortgage rate at the time of Renewal, the best option available to the borrower is to generally switch lenders. Once the borrower is within 120 days of their Mortgage Renewal/Maturity date, they should approach their Mortgage Broker who will help the borrower by shopping their file around to other lenders in order to obtain a lower interest rate for the borrower. The Mortgage Broker can also negotiate with the borrowers current lender in order to help negotiate a lower interest rate on their behalf.
As soon as the borrower decides upon the new lender, the required paperwork should be completed/signed accordingly, so that the Mortgage can be switched over on the Renewal date, therefore, the borrower would not encounter any fees or penalties as they would be honouring the entire term of their Mortgage loan.
Generally speaking, a borrower should never switch lenders before their current Mortgage term is up, otherwise, an early repayment penalty will have to be paid to their current lender. However, if the borrower has been granted a fully Open status for their specific type of Mortgage loan, they shouldn’t encounter any type of penalties in regards to repayment of their Mortgage loan.
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