Mortgage Renewal in B.C.
When renewing a mortgage in B.C., it’s easy to focus solely on finding the lowest rate. Low rates are a huge factor, but mortgage renewal is also a chance to review all the terms of a new mortgage so they align with your current needs and goals.
What is a mortgage renewal?
When your mortgage term comes to an end and your home loan isn’t completely paid off, you’ll need to renew for another term. Renewing your mortgage sets the interest rate and loan details for that next term.
In most cases, you can renew with your current lender or move to a new one. Shopping around won’t affect the renewal offer from your current lender — it might actually result in a counter-offer that saves you money.
Whichever path you choose, the best way to get the lowest rate is by negotiating. Negotiating may sound intimidating, but it’s not that stressful: Just ask your lender if the rate they offer you is the best they can do. If there’s a better offer out there, you’re free to pounce on it.
How the process starts in B.C.
Toward the end of your mortgage’s current term, your lender will send you a renewal offer that contains your new interest rate and the resulting monthly payments. If you do nothing, that renewal offer automatically goes into effect.
For homeowners looking for the most convenient renewal possible, that’s where the process begins and ends. But renewing your mortgage should involve negotiating your rate, as well as discussing whether your other mortgage details, like payment frequency and amortization period, still suit your lifestyle and financial situation.
Mortgage renewal in 6 easy steps
Set a calendar reminder. Don’t rush your mortgage renewal because you ran out of time. Commit to starting the renewal process two or three months before your current mortgage runs out.
Think beyond rates. Getting a low rate is not the only priority when renewing a mortgage. You’ll also want to consider things such as the term length that works best for you and how much you can afford to pay each month.. Knowing what you want will clarify what you’re asking for from lenders. A mortgage professional, such as a mortgage broker, can help if you’re unsure how to proceed.
Shop around. Contact a few lenders directly or use a mortgage broker to find the best mortgage for your needs.
Consider your renewal offer. How does your lender’s renewal offer stack up against the others you’ve found? ? If you get a more competitive offer elsewhere, ask your current lender if they can beat it.
Make a decision. If switching lenders, you’ll need to formally apply for the mortgage.
Review and sign the mortgage documents. Or, if necessary, provide a lawyer with the details they need to complete the transaction.
Mortgage renewal considerations
Renewing your B.C. mortgage is easier than getting a mortgage to buy a home, but it still requires careful consideration. Consider the following:
Making a lump-sum payment. If you’ve built up some savings, you might want to pay down a portion of your remaining balance to save on interest and reduce the time it takes to repay your mortgage.
Mortgage term. The longer your term, the more likely it is that interest rates will change by the time you’re up for renewal again. Whether that’s a pro or a con is up to you.
Mortgage type. At renewal, you can re-evaluate your need for a variable or fixed-rate mortgage. Variable-rates may be lower, but they can fluctuate over your term. Fixed mortgage rates remain the same for the entire term.
Payment frequency. When renewing your mortgage, you can choose your payment frequency, for example, monthly, bi-weekly or weekly.
Debt consolidation. If you have any outstanding high-interest debt, you could refinance while renewing and use the extra cash to pay off your debt.
Renewing with a different lender
If you decide to switch lenders, you’ll need to go through the entire application process since you’re a new borrower. That means you’ll need to provide your personal information, proof of employment and financial records.
But you’ll no longer have to pass a stress test when switching lenders. As of November 21, 2024, both insured and uninsured mortgages can be renewed at new institutions without being subjected to a stress test — so long as no other changes to the loan are being made.
How to get the best rates in B.C.
Getting the best mortgage renewal rates in B.C. is not a complicated process if you make use of the following tips:
Don’t accept the first offer. When your mortgage renewal letter arrives, contact your lender to see if they can do better.
Shop around. About four months before your mortgage term ends, check with other lenders to see what rates they’re offering. You’ll be in a much better position to negotiate with your current lender if you have a competitor’s offer in hand.
Use a mortgage broker. Enlisting the services of a mortgage broker can help because they’ll shop around on your behalf and present you with the best offer.
Best mortgage renewal rates in Canada
Compare offers from Canada’s top mortgage lenders and brokers.
Thinking beyond the rate
The best renewal rates might be attached to mortgages that don’t fit your needs. Select a mortgage that aligns with your financial goals and offers the features you want.
Here's an example from Reddit that explains the importance of thinking beyond the rate.
One Reddit user posted in r/PersonalFinanceCanada that they were leaning toward a five-year fixed mortgage rate instead of the increasingly popular three-year option. A three-year term means renewing sooner — potentially lucrative in a falling-rate environment — but the five-year offers were lower and saved them money today.
A five-year fixed rate might cost the person who wrote the post additional interest over the course of the term, but the lower payments would allow them to fund their TFSA.
Frequently asked questions
Can a mortgage be renewed without income in B.C.?
Can a mortgage be renewed without income in B.C.?
It might technically be possible to renew your mortgage without an income — if you stick with your current lender and they don’t require proof of employment on renewals. Renewing a mortgage without having the money to pay for it could be exceedingly risky.
Why do an early renewal on a mortgage in B.C.?
Why do an early renewal on a mortgage in B.C.?
An early mortgage renewal may be worth it if you’re offered a lower interest rate that will save you more over the long run, or if you’re looking to do a cash-out refinance and consolidate high-interest debt.
What is a mortgage renewal statement?
What is a mortgage renewal statement?
A mortgage renewal statement, sometimes called a mortgage renewal letter, must be sent out at least 21 days before the end of your current term.
The statement should contain the following information:
The amount owing at your renewal date.
The new interest rate offered.
The new payment terms.
The length of the mortgage term you’ll be agreeing to.
Any fees or charges.
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Clay Jarvis
Clay Jarvis
Kurt Woock