What is a mortgage renewal?
When you first buy your home, you’ll also choose a mortgage term. When the term comes to an end, you can either pay off the remaining balance or renew your mortgage for another term. Understandably, most homeowners choose to renew and often take advantage of this milestone to update their mortgage terms to better suit their needs at the time.
Understanding mortgage term vs. amortization
The mortgage term is the length of your current mortgage agreement, typically between one and five years. At the end of each term, you can renew your mortgage or transfer to a new lender.
The amortization period is the length of time you’ll need to fully pay off your mortgage. In Canada, amortization periods are typically 25 or 30 years. The length of your amortization period impacts both your monthly payment amount, as well as how much interest you’ll pay over the life of your mortgage. A longer amortization period means lower monthly payments, but you’ll pay more interest overall.
Do I have to renew with my existing lender?
No. When your mortgage term ends you are free to either renew with your existing lender or transfer your mortgage to a new one.
Renewing with your existing lender has its benefits, including not needing to requalify or taking advantage of loyalty discounts or special rates. Nonetheless, it’s important to explore your options. We always recommend connecting with a mortgage specialist to help you identify and compare your various options.
What do I need to know about switching lenders?
If you are considering transferring your mortgage to a new lender there are a few things to keep in mind. Similarly to when you purchased your home, you’ll need to qualify and apply with the new lender. This will include submitting documentation about your income, credit history, and an appraisal of the property may also be required.
Depending on your lender, you may be charged fees for transferring your mortgage or breaking your current agreement early. Conversely, lenders may offer incentives or bonuses to attract new customers and encourage them to move their mortgages over.
Finally, negotiate your mortgage rate and terms. Even if you stay with your current lender, you might be able to get better terms—especially if you come prepared with competitive offers.
Should I refinance to access equity?
If your home’s value has increased, you may be able to refinance and access some of your available equity.
You might use this equity to renovate your home, pay off higher-interest debt, or cover major expenses like education or family support. However, it’s important to remember that refinancing will increase your mortgage amount and could extend your amortization, which means you’ll pay more interest over time.
If you co-own your home with Ourboro, it’s also important to remember that you can only access your share of the home’s equity. We recommend speaking to a member of our team if you are considering this option.
What else should I consider before renewing my mortgage?
A new mortgage term is a great time to review your household finances. Before locking in a new term, ask yourself these questions:
Has my financial situation changed? Maybe you’ve made a career shift, started a family, or taken on new debt. These changes can affect how much you can, or should, pay each month.
Is my current mortgage still the right fit? Review your interest rate, term, and prepayment options. Take the time to describe your financial situation to your mortgage specialist and ensure you get the right product. Don’t hesitate to ask questions and make sure you understand the mortgage you have, or want.
Could I increase my payments? If your budget allows, increasing your payments or switching to biweekly payments could help you become mortgage-free faster—and save big on interest. If you have the financial flexibility to make extra payments make sure your mortgage term allows for it.
Am I sure about extending my amortization? Lower monthly payments can sound appealing, but stretching out your mortgage means you’ll pay more interest in the long run. This could cost you thousands or even tens of thousands over time, so consider your options carefully.
Am I planning to move soon? If you think you’ll sell your home before the new term is up, you’ll want to avoid costly penalties. Look for mortgage products with more flexible terms or open prepayment options.
Renewing or Refinancing as an Ourboro Co-owner
To learn about the renewal and refinancing process, and what to keep in mind, be sure to check out the Guide to Renewing, Transferring, and Refinancing your Mortgage, available in your Ourboro Portal.
You can also find additional resources on buying out Ourboro’s share or how to access renovation credits, if these are options you’re considering.
Making the most of your mortgage renewal
Your mortgage renewal is more than just a routine task—it’s an opportunity to take control of your financial future. Whether you’re sticking with your current lender, transferring to a new one, or refinancing to unlock equity, the key is to understand your options and make sure your mortgage still fits your lifestyle.
Have questions? Don’t hesitate to speak with a mortgage specialist or broker. The right guidance can help you make confident, informed decisions at every stage of your homeownership journey.
