Mortgage Renewal in Hamilton, Burlington and Southern Ontario

How mortgage renewal works in Ontario

When your term ends, you still owe the balance, so you choose a new rate and term. Federally regulated lenders must send you a renewal statement at least 21 days before your term ends. It lists your balance, rate, payment frequency, term and any fees.

If you take no action, your mortgage may renew automatically, and the statement must tell you if that’s the plan. You can still ask your lender for a better rate than the one offered, and it helps to have competing offers in hand.

Your options at renewal

If you’re considering a change before your term ends, ask your lender about an early renewal or a blend-and-extend, which combines your current rate with a current rate in a new term. Terms vary, and it’s worth comparing the full cost with waiting until your term ends.

When to start

I recommend starting about four months before your renewal date. Rate holds vary by lender, usually from 60 to 130 days, so starting early gives you time to compare and protects you if rates rise before your renewal date.

Switching lenders at renewal

Since late 2024, you generally don’t need to pass the stress test to move your mortgage to another federally regulated lender at renewal, as long as you don’t increase your loan amount or your amortization. This applies to both insured and uninsured mortgages. The exemption doesn’t mean automatic approval. The new lender still has to approve you and may use different criteria than your original lender. Credit unions and other lenders that aren’t federally regulated may set their own rules.

Moving at the end of your term carries no prepayment penalty. There can be other costs, so ask whether the new lender will cover them:

• Discharge, registration, transfer or assignment fees
• An appraisal fee, if the lender needs one
• Added fees and conditions if your mortgage is registered as a collateral charge
• A new mortgage insurance premium, if your insured loan amount increases or your amortization gets longer

Here is what a new lender usually asks for:

• Recent pay stubs and a letter of employment
• T4 slips and your two most recent CRA Notices of Assessment
• Your current mortgage statement and renewal offer
• Your property tax bill
• Government-issued ID

If you’re self-employed, a lender will also look at your business income. My self-employed mortgage page explains how.

What to compare besides the rate

A rate is easy to compare, but it isn’t the only thing that matters over a five-year term.

• Prepayment privileges: how much extra you can pay each year without a penalty.
• How penalties are calculated: if you break a mortgage early, the penalty is usually the higher of three months’ interest or the interest rate differential, and lenders calculate the differential differently.
• Portability: whether you can take the mortgage with you if you move.
• Term and rate type: whether your plans suit a shorter or longer term, and fixed or variable. I wrote about locking in a variable mortgage if you’re weighing that decision.

For scale, each 0.25 percentage point on a $400,000 balance is about $1,000 of interest in the first year. This is arithmetic for illustration, not a promised saving. What you can get depends on your mortgage, your property and the market.

Renewing in your area

The renewal process is the same across Ontario, but your property and your home’s current value can affect your options.

• Hamilton: if your home’s value has dropped since you bought, you can usually still switch when you aren’t borrowing more. Older homes may need an updated inspection for some lenders.
• Burlington: on larger balances, small differences in rate and penalty terms add up, so it’s worth comparing them closely.
• Brantford: if you’re in a private or alternative mortgage, your renewal can be a good time to review whether you can move back to a regular lender. See private lending.
• St. Catharines and Niagara: if you own a rental near Brock, lenders may look at it differently from your own home, so tell me early.
• Caledonia and Haldimand County: rural properties on wells and septic systems may need extra checks with a new lender.
• The Kawarthas: fewer lenders accept seasonal cottages, which can narrow your choices. See rural and cottage mortgages.

If you work in education, my Teachers Mortgage Program applies at renewal too, with preferred rates from lenders that value educator income and up to $750 in rebates.

Questions about renewing

How early can I renew my mortgage in Ontario?

Many lenders will let you renew within about four to six months of your maturity date without a penalty. Earlier than that may involve a penalty, so check your contract or ask your lender.

What happens if I do nothing?

Your mortgage may renew automatically on the terms in your renewal statement, which must say if automatic renewal is planned. It’s worth reading the statement and comparing it with other options before that happens.

Does it cost anything to switch lenders at renewal?

There’s no prepayment penalty at the end of your term, but there can be discharge, legal and appraisal costs. Many lenders will cover some or all of them, so it’s worth asking and comparing the total.

Do I need to pass the stress test to switch?

Generally no, if you’re moving to another federally regulated lender and not increasing your loan amount or amortization. The new lender still has to approve you.

Can I borrow more when I renew?

Yes, but that’s a refinance. You’ll need to qualify, including the stress test, and legal and appraisal costs usually apply. See mortgage refinancing.

Should I renew for a 3-year or a 5-year term?

It depends on your plans, your budget and how you feel about rate changes. If you might move, refinance or pay off a large amount within a few years, a shorter term may suit you better. I can show you both side by side.

Dustin Arruda, Level 2 Mortgage Agent, Lic. #M19001236, DLC National Ltd., FSRA #12360

I’ve helped clients across Southern Ontario for over seven years, from my office at 901 Guelph Line in Burlington, with access to over 100 lenders. More about me.