Mortgage renewal calculator

It may hearten you to know that you likely have options. When it’s time to renew your mortgage, you can either stay with your current lender or shop around for a new one that offers a lower interest rate or different terms. Using a mortgage renewal calculator can help you compare mortgage offers and pick the best one available at the time of renewal. 

Using a renewal calculator is one of the easiest ways to determine if your current mortgage is working for you or if it’s time to find one that better suits your needs.

Here’s how our mortgage renewal calculator works: You enter the mortgage amount and your home’s location, plus the following variables: amortization period, interest rate and payment frequency. You can enter up to four sets of variables at once. The calculator also takes into account whether your original down payment was less than 20% or not. As you enter these details, the calculator finds the best rates currently offered by a variety of lenders across Canada. It shows you how much your regular mortgage payment would be. Below that, you can enter other expenses, such as utility bills, home insurance and condo fees, to see what your monthly costs would look like.

What is a mortgage renewal?

If you haven’t paid off your mortgage by the end of your mortgage term, you’ll need to repay the balance in full or renew your mortgage contract. You can renew with your current lender for another term or choose a new lender whose conditions better suit your needs. 

What is the process for renewing a mortgage?

If your lender is a federally regulated institution, like a bank, you should receive a renewal notice at least 21 days before your current mortgage term expires. The statement will contain information on the mortgage contract to be renewed, including the mortgage balance, interest rate, payment frequency and term. If your lender chooses not to renew your mortgage (because you haven’t been meeting your obligations, for example), it must also notify you 21 days in advance. 

When providing you with the renewal notice, your lender may also send you a new mortgage contract to sign. Note that, in some cases, your mortgage contract may renew automatically if you don’t renegotiate or change providers before your current term ends. 

Things to consider when renewing your mortgage

Renewing with your current lender is fast and convenient, and it’s common for mortgage providers to offer discounts to existing customers at renewal time. However, those discounts may not be as good as the interest rates you can get elsewhere. It’s important to shop around and compare the rates offered by other lenders.

Here are some things to consider before deciding whether to renew: 

• Use a mortgage renewal calculator to get a sense of your options and determine if you can save money by getting a better interest rate. 
• Investigate the costs or penalties for changing lenders, as there may be fees attached. If you switch lenders at renewal, you shouldn’t face the penalties you typically would for breaking your mortgage during the term. However, there may still be setup or appraisal fees with the new lender. 
• Remember that the interest rate is only one aspect of a mortgage. In certain situations, it may be more beneficial to pick a mortgage with a slightly higher interest rate if the contract offers more flexibility, such as the ability to make additional payments without penalty.
• It always pays to shop around, but this is especially true when interest rates are changing rapidly. For example, during the first half of 2022, both variable mortgage rates and fixed mortgage rates rose due to changes in the economy. Fluctuations like these can impact the rate you can expect to get.

No matter how you decide to proceed, give yourself plenty of time to research your mortgage options—don’t wait until your renewal notice arrives to get started. 

Renewing a mortgage early

You don’t have to wait until your mortgage term is about to end—most lenders allow you to renew your mortgage early without any penalties, up to 120 days (four months) before the end of your term. This only applies if you stick with the same lender; switching providers before the end of your term may incur a penalty. 

Whether you renew early or not, it’s wise to use this four-month period to weigh your options and decide how you want to proceed. An early mortgage renewal can save you money if you expect mortgage rates to rise in the short term. Renewing your mortgage when interest rates are low can help you lock in a better rate for the duration of your new term. However, if you believe mortgage rates will fall in the near future, it may be best to hold off on renewing until closer to the end of your contract.

What’s the difference between renewing and refinancing a mortgage?

If you stay with the same lender and stick to the terms of your original contract, that’s considered a renewal. If, however, you want to change the terms of your mortgage before the term expires, that’s called refinancing. 

You can attempt to renegotiate your agreement with the mortgage lender at any time for better terms, but there may be costs associated with refinancing, especially if you break your mortgage contract to go with a different provider. The potential costs include discharge fees from your current lender, registration and home appraisal fees from a new lender, and other administrative and legal fees.

More mortgage calculators:

• Every mortgage calculator you will ever need
• Mortgage affordability calculator
• Mortgage payment calculator
• Land transfer tax calculator
• CMHC mortgage insurance calculator
• Mortgage refinance calculator

About Sandra MacGregor

Sandra MacGregor has been writing about personal finance, mortgages, investing and credit cards for over a decade.

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About Ryan Bembridge

Ryan has been writing about property markets for a decade. He is currently the editor of online magazine PropertyWire, which caters to landlords, agents and developers.

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