Mortgage renewal: don’t sign the first letter

Your lender mails you a renewal form. It is easy to sign, and that is exactly the problem.

Renewal is the one moment when you can change lenders without a penalty. Many people sign the form that arrives in the mail because it is the fastest thing to do. It is also the choice that gives away all your negotiating power.

When to start

Four to six months before maturity. That is the window where most lenders will hold a rate for you in advance. If rates rise while you are looking, you are protected. If they fall, we check again.

The month before is late. Transferring to another lender takes time: verifications, documents, the notary. Three weeks out, you often have one option left — sign what you are handed.

What we look at together

1. What has changed in five years. Your income, your credit, your property value, your other debts. Your profile is not what it was a full term ago, and that can work in your favour.

2. Term length and rate type. Fixed or variable, three years or five: the right answer depends on your plans, not on a general rule. If you might sell in two years, a five-year term can cost you a penalty.

3. The conditions, not just the rate. Prepayment privileges, portability, how penalties are calculated. A slightly lower rate with poor terms can cost more overall.

4. A consolidation, if it applies. Renewal can be the right time to fold high-interest debt into your mortgage. It does not suit everyone, and I will tell you if it does not suit you.

Transferring to another lender

If a better offer exists elsewhere, transferring at renewal happens without a penalty. Some lenders even cover the transfer costs. I coordinate with your current lender, the new one and the notary.