Are you anxious about an upcoming mortgage renewal? A survey from real estate brokerage Zolo found that only 3% of homeowners never worry about affording their mortgage at renewal, while 79% say they worry sometimes, often or all the time. The good news is you typically have choices: you can renew with your current lender or shop around for a better interest rate or different terms. A mortgage renewal calculator can help you compare offers and choose the option that fits your budget and goals.
A mortgage renewal calculator simplifies the decision by letting you enter your mortgage balance, home location, amortization period, interest rate and payment frequency. Many calculators allow you to test multiple scenarios at once — for example, comparing several rate and term combinations — and they often account for whether your original down payment was less than 20%. As you input values, the tool estimates your regular mortgage payment and can show how additional costs like utilities, home insurance and condo fees affect your total monthly housing expense.
You will be leaving MoneySense. Just close the tab to return.
What is a mortgage renewal?
If you haven’t paid off your mortgage by the end of your mortgage term, you must either repay the outstanding balance or renew the mortgage for a new term. Renewing can mean signing another contract with the same lender or moving to a different lender with terms that better match your needs. Renewal is a chance to revisit interest rates, payment schedules and flexibility features such as prepayment privileges.
What is the process for renewing a mortgage?
Federally regulated lenders, like major banks, generally send a renewal notice at least 21 days before your current term ends. That notice outlines the balance owing, the interest rate being offered, payment frequency and the proposed new term. If a lender decides not to renew your mortgage, it must also provide at least 21 days’ notice. Sometimes lenders include a new contract to sign with the notice; in other cases, the mortgage may renew automatically if you don’t take action before the term expires.
Is a mortgage lender offering you a cash bonus? Here’s why
Some banks and financial institutions offer cash incentives or rewards to attract customers to switch lenders. These cash-back offers are often sized to compensate for the cost of switching, such as discharge or legal fees. For example, some lenders provide flat cash amounts tied to the mortgage size, and others may offer rewards points redeemable for travel and other benefits.
While a cash bonus can be appealing, treat it as one part of the overall deal. A temporary cash incentive may not offset a higher long-term interest rate or less favorable mortgage features. Evaluate the full cost over the life of the new term — including fees, flexibility and the interest rate — before deciding to switch.
— Ryan Bembridge
Things to consider when renewing your mortgage
Renewing with your current lender is often fast and convenient, and lenders frequently offer renewal discounts to retain customers. Those offers, however, may not be the best available. Before you sign, shop around and compare offers from other lenders.
Key factors to weigh:
- Use a mortgage renewal calculator to compare scenarios and estimate potential savings from a lower interest rate or different amortization.
- Check costs associated with changing lenders. Although switching at renewal usually avoids the penalties for breaking a contract mid-term, you may face setup costs, appraisal fees or administrative charges with a new lender.
- Interest rate is important, but so are contract features. A slightly higher rate might be worthwhile if the mortgage permits penalty-free additional payments, lump-sum prepayments, or flexible payment frequencies.
- Market conditions matter. If rates are volatile, the timing of your renewal can significantly affect your new rate. When rates are rising, locking in a rate early can protect you; when rates are expected to fall, waiting may be beneficial.
Start researching your options well before you receive a renewal notice so you have time to get quotes and compare terms.
Renewing a mortgage early
Many lenders allow you to renew up to 120 days (four months) before your term ends without penalty if you remain with the same lender. Use that window to compare offers, lock in a rate if you expect increases, or wait if you expect rates to drop. Be cautious about switching providers during the term, as that can trigger break fees and other costs.
What’s the difference between renewing and refinancing a mortgage?
Renewing typically means extending your mortgage with the same lender under the same or similar conditions at the end of a term. Refinancing involves changing the terms of your mortgage — such as switching lenders, changing the amortization or borrowing additional funds — before the term ends. Refinancing can lead to better terms but often incurs extra costs, including discharge fees, registration, appraisal and legal fees. Compare the upfront costs with the long-term savings before refinancing.
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
What does the * mean?
Affiliate links on this page may result in a payment to MoneySense (owned by Ratehub Inc.), which helps keep our content free to readers. Links marked with an asterisk (*) or labelled “Featured” are affiliate links. Links labelled “Sponsored” indicate paid placements. Our editorial content is independent and not determined by these partnerships; products are evaluated on their merits and included based on editorial judgment.