Mortgage Renewal in Calgary: 7 Things to Check Before You Sign Your Lender’s Offer

If your mortgage renewal is approaching, your current lender will usually send you a renewal offer before your existing term expires. It can be tempting to simply sign the offer and move on.

But your mortgage renewal is also an opportunity to review your financing and make sure your mortgage still works for your current situation.

A lot can change during a mortgage term—your income, debts, home value, financial goals and plans for the property may all be different today.

Before you sign your renewal offer, here are seven things worth reviewing.

1. Don’t Look at the Interest Rate Alone

The mortgage rate is important, but it shouldn’t be the only factor you consider.

Two mortgages with similar rates can have very different terms, including prepayment privileges, penalties, portability and refinancing restrictions.

A slightly different mortgage structure may ultimately be more suitable depending on what you expect to do during your next term.

2. Compare Your Renewal Offer With Other Lenders

Receiving a renewal offer doesn’t mean you have to stay with your existing lender.

Before renewing, it can be worthwhile to compare your current lender’s offer with mortgage options available elsewhere.

As a mortgage agent, I can review options from multiple lenders and help you compare more than just the advertised rate.

The goal is to understand what is available before you make your decision.

3. Decide Whether Fixed or Variable Makes Sense for You

Your financial circumstances and comfort with changing payments or interest costs may be different from when you originally obtained your mortgage.

At renewal, consider whether a fixed or variable mortgage better suits your current situation.

A fixed-rate mortgage generally provides greater payment and rate certainty during the term, while a variable-rate mortgage responds differently to changes in lender prime rates.

Neither option is automatically right for everyone. Your plans, budget and risk tolerance should be considered.

4. Review Your Remaining Amortization

Your renewal is also a good time to look at how many years remain on your mortgage.

For example, some homeowners may want to increase their payments or use accelerated payment options to reduce their mortgage faster.

Others may be more focused on monthly cash flow.

The important thing is to understand how your payment structure affects both your monthly budget and the total amount of interest you may pay over time.

5. Consider Whether You Have Other High-Interest Debt

If you’ve accumulated credit-card balances, personal loans or other higher-interest debts, your mortgage renewal may be an opportunity to review your overall financial picture.

Depending on your available home equity and qualification, refinancing or debt consolidation may be an option.

However, moving short-term debt into a mortgage can extend the period over which that debt is repaid. The costs and long-term implications should therefore be reviewed carefully before making a decision.

6. Think About Your Plans for the Next Few Years

Before choosing another mortgage term, ask yourself what could happen during that period.

Are you planning to:

• Sell your home?
• Purchase another property?
• Renovate?
• Access equity?
• Buy an investment property?
• Make substantial additional mortgage payments?

Your future plans can affect which mortgage features are valuable to you.

For example, someone expecting to sell in two years may evaluate a five-year mortgage differently from someone planning to remain in the same property long term.

7. Start Reviewing Your Mortgage Before the Renewal Date

You don’t have to wait until the last minute to start looking at your options.

Reviewing your mortgage ahead of time gives you an opportunity to understand your existing mortgage, compare available options, gather any required documents and decide what you want your next mortgage term to accomplish.

It also reduces the pressure of trying to make an important financial decision immediately before your renewal date.

If your mortgage is approaching renewal, you’re welcome to contact me for a mortgage review.