When your mortgage term ends, you have an important decision to make—renew, refinance, or pay off the remaining balance. Many homeowners don’t think about their mortgage until they receive a renewal notice, but understanding your options ahead of time can save you thousands in interest and help you secure better terms.
In this article, we’ll break down what happens when your mortgage term ends, the choices available to you, and key strategies to make the most of your renewal.
What Is a Mortgage Term?
A mortgage term is the length of time your mortgage agreement is in effect with a specific lender, interest rate, and terms. In Canada, common mortgage terms range from six months to five years, though some can be as long as 10 years.
At the end of your term, your mortgage does not automatically disappear—you still owe the remaining balance. This is when you must renew, refinance, or pay off your mortgage in full.
What Are Your Options When Your Mortgage Term Ends?
1. Renew Your Mortgage
If you’re satisfied with your current lender and they offer you a competitive rate, you can renew your mortgage for another term. However, don’t automatically accept the first offer—lenders don’t always offer their best rates upfront.
What to do:
✔ Compare renewal offers with other lenders before signing.
✔ Negotiate for a better interest rate or improved terms.
✔ Consider adjusting your amortization period or payment schedule.
2. Refinance Your Mortgage
Refinancing involves switching to a new mortgage agreement, either with your current lender or a new one. This option is ideal if you want to:
- Secure a lower interest rate
- Access home equity for renovations, investments, or debt consolidation
- Change your mortgage type (e.g., fixed to variable rate)
- Adjust your loan term or payment structure
What to do:
✔ Use our Mortgage Payment Calculator to see how different terms affect your payments.
✔ Work with a mortgage broker to explore better rates and lender options.
✔ Consider refinancing if you need more financial flexibility.
3. Pay Off Your Mortgage in Full
If you have the funds available, you can pay off your mortgage balance entirely. This eliminates future interest costs and frees up your income.
What to consider:
✔ Check if there are any discharge fees from your lender.
✔ Ensure you still have enough liquidity for other financial goals.
✔ Confirm that paying off your mortgage aligns with your long-term plans.
What Happens If You Do Nothing?
If you don’t take action before your mortgage term ends, most lenders will automatically renew your mortgage at their posted rate, which is often higher than the competitive rates available.
Avoid this by:
✔ Reviewing your renewal notice months in advance.
✔ Shopping around for better rates before your term ends.
✔ Negotiating or switching lenders if your current offer isn’t competitive.
Key Tips for Mortgage Renewal Success
✅ Start researching early – Don’t wait until the last minute. Begin exploring options 4-6 months before your term ends.
✅ Negotiate your rate – Lenders often don’t offer their best rates upfront. Always ask for a better deal.
✅ Compare multiple lenders – Your existing lender isn’t always your best option.
✅ Consider refinancing – If your financial situation has changed, refinancing might be more beneficial than renewing.
✅ Work with a mortgage broker – Brokers have access to multiple lenders and can often find better rates than banks.
Final Thoughts
When your mortgage term ends, you have the power to renew, refinance, or pay off your loan. Understanding your options ensures you make the best financial decision for your future. Whether you want to lower your interest rate, access home equity, or adjust your mortgage terms, planning ahead will help you save money and secure the best deal.
Need help with your mortgage renewal? Contact The Local Broker for expert advice and personalized solutions.
