Skip to content

Early mortgage renewal offer.. Should you take it?

mortgage renewal

If you’re renewing your mortgage this year, you might be tempted to take your lender’s offer of an early renewal. But, is that the best decision? In some scenarios, absolutely yes. Many lenders offer a very competitive renewal rate. Maybe your employment situation has changed and the security of renewing now will give you better piece of mind. Whatever the reason – you need to be confident in your decision which is why speaking with an unbiased broker is important.

How renewing early can cost you in the long run:

  1. The new, higher interest rate will be effective immediately. This means that if you have a lower rate and are renewing into a higher one, you’ll lose the benefit of the lower rate from now until the actual renewal date.
  2. You may not be eligible for certain discounts or promotions if you choose to renew early.
  3. Your bank will not hold today’s rates for you until the end of your current mortgage term.
  4. There may be penalties for breaking your current mortgage contract.
  5. You’ll miss out on the opportunity to shop around for the best rate when your actual renewal date comes around.
  6. Interest rates are constantly fluctuating, and if you renew your mortgage early and rates go down, you could end up paying more for your mortgage in the long run.

So, while it might be tempting to renew your mortgage early, it’s important to weigh all of the potential risks and rewards before making a decision.

mortgage renewal

Should you shop around for your mortgage renewal?

As a mortgage broker, I can help you lock in a low interest rate for up to 120 days. That way, even if rates go up, you’ll still be able to take advantage of the low rate you locked in. This will allow you to keep an eye on the market and make an informed decision about when to renew your mortgage, without the risk of rates going up.

I can also shop around for the best rates and help you understand the various terms and conditions of different mortgages. This will allow you to make an informed decision to ensure you are in the best mortgage product for both your short-term and long-term goals.

Fixed or Variable?

Canada’s fixed rates are based on the “bond yield” rather than the prime rate (which is what variable mortgage rates are based on). As of the time this article was written, the bond yield is trending down, which means fixed rates are trending down. Want to know more about Bond Yields? Check out this article. Variable rates are based on Canada’s prime rate – so if it goes up, so does your payment, if it goes down, so does your payment. Prime rate is meant to help keep inflation in check.

Renewing your mortgage early can be a costly and risky decision. Instead, consider working with a mortgage broker to take advantage of the best mortgage rates without renewing your mortgage early.

If you would like to discuss possible options for your upcoming mortgage renewal this year, please reach out  and we can set a time for a quick chat.