Mortgage Renewal Ontario: Your Step-By-Step Guide

Guide to Mortgage Renewal in Ontario

At the end of your mortgage term, you’ll need to either pay off your mortgage in full or renew your mortgage by agreeing to a new contract for an additional term.

If you still owe money on your Ontario mortgage at the end of your term, renewal is a chance to reassess your mortgage and consider what changes you may need. When you renew your mortgage, you may want to renegotiate interest rates, terms and your payment schedule.

What is a mortgage renewal in Ontario?

When you took out your mortgage, you agreed to an amortization period, or the time required to completely pay back the mortgage. You also agreed to a specific term, which is typically five years but may be more or less. For example, if you took out a five-year mortgage in July 2020, your term will end in July 2025.

As you approach the end of your mortgage term, you’ll need to either pay off the balance in full or sign a new mortgage contract. Agreeing to that new contract is called a mortgage renewal.

Renewing vs. refinancing

Renewing a mortgage in Ontario is similar to refinancing, but there are important differences between the two processes:

Mortgage renewal: A mortgage renewal happens at a set time (at the end of a term) and involves working with a lender to extend the mortgage agreement.
Refinancing: Refinancing can happen at any point during the term, and involves breaking the mortgage agreement to pursue better options, such as a lower interest rate. However, refinancing can come with additional fees, prepayment penalties and the need to requalify for a mortgage.

Beginning the mortgage renewal process in Ontario

Your current lender will send you a renewal offer, also known as a renewal statement, as you near the end of your mortgage. You might end up accepting an offer from your current lender, but shopping around before you do can lead to more competitive options.

What you’ll find in a mortgage renewal statement

In Ontario, as in all of Canada, mortgage providers are required to send you a renewal statement at least 21 days before your mortgage term is set to expire. A renewal statement must include:

The remaining principal.
The interest rate offered to you, which won’t change until the renewal date.
The payment frequency.
The term of the new agreement.
Any charges or fees.

The statement must also note whether your mortgage will renew automatically if you don’t take any action. While this may seem convenient, you likely won’t get the most competitive interest rate and terms by allowing your mortgage to renew automatically.

Ask these questions before renewing your Ontario mortgage

The best time to consider what kind of mortgage is the best fit for your needs and overall financial goals is at renewal.

Start by considering your current lender and the offer they sent. Ask yourself:

Is this the best rate you can get? The only way to know the lowest rate available to you is to get offers from a few other lenders. If you like your current lender but want a lower rate (and who doesn’t!), look for another lender who offers you something better; show it to your current lender, and they may improve their original offer. If the idea of negotiating stresses you out, or if you just can’t afford the time needed to DIY, call a mortgage broker, who will make the process much easier.
Will a fixed or variable mortgage rate better serve your needs? Some people prefer to go with the certainty of fixed regular payments over the possible savings that could result from choosing a variable mortgage rate.
Do you want to change your payment schedule? For example, you may want to switch from monthly to bi-weekly payments.
Do you want to increase your mortgage to access more equity? Some homeowners use their equity to finance big projects like home renovations.
Are you happy with the customer service offered by your lender? If not, take note of some things you wish they’d do better.

How to get the best mortgage renewal rates in Ontario

Spend time exploring your options, including doing some research on mortgage renewal interest rates. Request quotes from various lenders by reaching out to banks, speaking with a mortgage broker or using online platforms to compare rates and terms.

Online rate platforms are particularly appealing because you can compare multiple quotes with just one application form. Remember to thoroughly compare all important factors such as interest rates, term lengths, amortization periods, estimated closing costs and other fees to make sure you’re truly comparing apples to apples.

Nerdy Tip: The APR, or annual percentage rate, reflects not only the rate but also other costs associated with a mortgage, including fees. When comparing loans, especially from different lenders, you’ll want to compare the APR — not just the rate — to get the most accurate comparison. A higher rate with a lower APR will cost less over the life of the loan.

Decide where you’ll renew your mortgage in Ontario

Once you’ve thought about any potential changes you might want to make to your mortgage, and you have a good idea of current rates, it’s time to take action. At this point, you can choose to renew your mortgage with the same lender or with a new lender.

Renewing your mortgage with the same lender

If you decide to stick with your current lender and don’t want to change your mortgage terms, you’ll usually just have to sign the mortgage contract that often comes with your renewal statement.

However, before you sign, consider renegotiating your interest rate. You don’t have to go with the rate your lender offers. Instead, demonstrate that you’ve done some research by showing your lender what rates their competitors are offering and asking them to match or beat those rates.

Renewing your mortgage with a different lender

If you’re going to change providers, waiting until the end of your current mortgage term is the best time to do so, as you won’t have to pay a prepayment penalty. Just be aware that your new provider may have different qualification requirements regarding criteria like income, debt ratios and credit scores. Switching lenders may also come with additional costs like appraisal and legal fees. You might also be required to pay a new mortgage insurance premium, so be sure to read the fine print of your new contract and be completely clear on any costs involved.

About the Authors

Kurt Woock

Kurt Woock started writing for NerdWallet in 2021 and has covered mortgages, cryptocurrency, electric vehicles and small business software. Prior to joining NerdWallet, Kurt worked for the Colorado Public Employees'…

Sandra MacGregor

Sandra MacGregor is a freelance writer who has been covering personal finance, investing and credit cards for over a decade. Her work has appeared in a variety of publications like…