Early mortgage renewal may not be the best option

Renewing your mortgage

It’s interesting to note that approximately half of all mortgages in Canada are set to renew in 2025 or 2026, due in part to the real estate frenzy that transpired over the course of the COVID-19 pandemic along with record low interest rates.

Analysts estimate $251 billion in mortgages will come up for renewal in 2024 and another $352 billion the following year. Most people will face higher interest rates with increased mortgage payments.

If your mortgage is up for renewal in the next few months, you may have already received an early renewal offer from your lender aiming to entice you with the possibility of avoiding potentially higher interest rates.

While the appeal of an early renewal may be strong, it's essential to be aware of the potential drawbacks and costs associated with that decision.

Let's explore why renewing your mortgage early may not be the best course of action.

One significant drawback of early mortgage renewal is that the higher interest rate becomes effective immediately. Unlike waiting until your actual renewal date, your bank will not hold the current rates for you. If you choose to renew early, transitioning from a lower rate to a higher one, you'll lose the advantage of the lower rate for the remaining duration of your current mortgage term.

Consequently, your interest costs will increase right away, and you may find yourself facing a higher mortgage payment right from the start.

Furthermore, early mortgage renewal can be a risky move due to the unpredictable nature of interest rates. The rates are constantly fluctuating, and if you decide to renew early and the rates subsequently decrease, you could end up paying more for your mortgage over the long run. This risk of potentially missing out on even lower rates in the future is an important factor to consider when evaluating your renewal options.

So, what alternatives do you have without opting for an early mortgage renewal? As a mortgage broker, I can offer you a rate hold, which allows you to secure a specific interest rate for a predetermined period, typically up to 120 days. This means that even if interest rates rise during this period, you'll still benefit from the low rate you locked in. With a rate hold, you have the flexibility to monitor the market and make an informed decision about when to renew your mortgage, all while enjoying the advantages of your current lower interest rate until your renewal date.

By working with a mortgage broker, such as myself, you gain access to a wide range of mortgage options from various lenders. I can help you shop around for the best rates and guide you in understanding the different terms and conditions associated with each mortgage product. This ensures that you can make an informed decision, aligning your mortgage choice with both your short-term and long-term financial goals.

In conclusion, renewing your mortgage early can be a costly and potentially risky decision. Instead, consider collaborating with a mortgage broker who can offer you a rate hold, allowing you to secure a low rate until your renewal date. Additionally, I can assist you in exploring various mortgage options, ensuring that you make an informed decision tailored to your specific needs. It's a win-win situation that enables you to keep an eye on the market while maintaining your existing lower interest rate until the end of your mortgage term.

If you would like to discuss your upcoming mortgage renewal and explore the possible options available to you, please feel free to book a convenient time on my calendar for a quick chat. You can find my calendar here: or you can email me at [email protected]

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

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About the Author

April Dunn is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects. For over two decades, she has been helping clients to arrange their financing to purchase a home, refinance, or renew their mortgages. Drawing from her extensive experience as a Credit Union manager, a Residential Mortgage Manager with a large financial institution, and as a Mortgage Broker, April has the necessary expertise to design a tailored mortgage plan with features and options that cater to each client's individual needs. April offers a complete range of residential and commercial mortgage financing services to clients throughout British Columbia and the rest of Canada through her affiliation with the Mortgage Architects network.

Contact e-mail address: [email protected] or by phone at: 1-888-561-2679.


The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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