By Sandra MacGregor on January 23, 2023
Estimated Reading Time: 5 minutes

Mortgage renewal calculator

By Sandra MacGregor on January 23, 2023
Estimated Reading Time: 5 minutes

Use this tool to figure out if you can save money by switching lenders at the end of your mortgage term.

Thee are a lot of decisions to make when it comes to renewing your mortgage, including whether or not to stick with your current lender. A mortgage renewal calculator can simplify the process and help you pick the best mortgage offer available to you at the time of renewal.

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To use the mortgage renewal calculator above, click or tap on the “renewal or refinance” tab. The tool allows you to compare the cost of different mortgage offers, based on a specified mortgage balance, amortization period and location. To help you find a competitive mortgage rate, this calculator generates the best mortgage rates currently offered by a variety of lenders across the country. It then shows you the cost of your regular mortgage payment, based on the payment frequency and interest rate of your choice. It’s 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.

What is a mortgage renewal?

If you haven’t paid off your mortgage come the end of your mortgage term, you’ll either 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.

The process for renewing your 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 is set to expire. 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 have not 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. However, it’s not always the best financial decision. It’s common for mortgage providers to offer discounts to existing customers at renewal, but those discounts may not be as good as what you can get elsewhere. That’s why it’s important to shop around and compare the rates offered by other lenders as well.

Here are some things to consider before deciding to renew or not:

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 than the one you currently have.
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. It’s important to understand how these fluctuations have impacted 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.

Early mortgage renewal

Most lenders allow you to renew your mortgage early without any penalties, up to 120 days (or 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 can result in paying a penalty.

Whether you choose to renew early or not, it’s wise to use this four-month period to weigh your options and decide how you want to proceed at the end of your term.

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.

Renewing versus refinancing your 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 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.

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