When should I start shopping my mortgage renewal?
Four to six months before maturity. Treat the offer your lender mails you as an opening position rather than a quote you have to take, and get a competing offer in writing before you answer it.
A renewal letter is an offer, and an offer you accept without a second one beside it is a price you never tested. Nothing in this build knows what your lender would give somebody else.
What a switch costs at maturity is a term of your own mortgage, so read it there. A straight switch moves the same balance and remaining amortization to a new lender, and whether that lender covers the transfer costs is a term to ask about rather than assume. If you want to increase the balance or change the amortization it becomes a refinance, which is a full application with an appraisal and legal costs.
Two things to check before you switch. Whether your existing charge is a collateral charge, which can make switching expensive or impractical, and whether you will still qualify under current rules, since a switch may require requalification depending on the lender.
The sequence that works: start four to six months out, get a written competing offer, take it to your current lender, and accept whichever is better on total cost. What the exercise is worth is arithmetic on your own balance rather than a figure anybody can quote you: put both rates through the renewal comparison and read the difference off your own numbers.
Answer it with your own numbers
You will need: current balance, current rate, offered rate, remaining amortization.
Compare your renewal offer against the marketNext questions
What is a mortgage penalty and how is it calculated?
On a variable it is normally three months' interest. On a fixed it is the greater of three months' interest and an interest rate differential, and the way your lender calculates that differential can change the bill by thousands.
Canada-wide
When does it make sense to refinance?
When the interest you save over the remaining term exceeds the penalty plus legal and appraisal costs, or when you need to consolidate higher-rate debt. Do the arithmetic; do not refinance on a feeling that rates look better.
Canada-wide