Right to Mortgage Renewal Notice | 21-Day Rule in Canada

RefinancePro.club

Your Right to a Mortgage Renewal Notice

Mortgage renewal is a pivotal moment in the financial life of every Quebec homeowner. Canadian law protects borrowers by requiring lenders to send a renewal notice at least 21 days before the term maturity date. This notice is not a mere administrative formality: it represents your window of opportunity to reassess your mortgage conditions and potentially achieve significant savings.

What the Law Requires of Your Lender

The Bank Act of Canada, supported by OSFI guidelines, requires fédéral financial institutions to send a written renewal notice at least 21 days before the mortgage term maturity date. This notice must contain the proposed conditions for the new term, including the interest rate, term length, payment frequency, and payment amount. For Quebec financial institutions regulated by the AMF, similar obligations apply under the provincial regulatory framework.

Why Automatic Renewal Costs You Money

If you fail to respond to the renewal notice before your term expires, most lenders proceed with an automatic renewal. This typically occurs at a one-year term at the institution's posted rate, a rate that is almost always higher than the negotiated rate you could obtain by actively shopping around. This default renewal is designed for the lender's convenience, not for the borrower's benefit.

How to Maximize Your Renewal Window

Start shopping as soon as you receive the notice: Do not wait until the final days. As soon as you receive the notice (typically 90 to 120 days before maturity), contact an AMF-certified mortgage broker who can solicit offers from multiple lenders simultaneously.
Obtain competitive quotes: Request written quotes from at least two or three lenders in addition to your current lender. Compare not only rates, but also prepayment privileges, accelerated payment options, and portability conditions.
Negotiate with your current lender: Present the best competitive offers to your current lender. Many institutions are willing to match or improve competing offers to retain your file, especially if you have a strong payment history.
Evaluate transferring to another lender: At renewal, you can transfer your mortgage to another lender without penalty. The new lender will often cover the transfer costs. However, ensure you compare the overall terms and not just the interest rate.

Required Contents of the Renewal Notice

The proposed interest rate for the new term and the rate type (fixed or variable).
The proposed term length (for example, one year, three years, or five years).
The periodic payment amount based on the current frequency.
The remaining mortgage balance at the current term maturity date.
The deadline to respond to the renewal offer.
Alternative term options available from the lender.

Renewal Notice: A written notice that the mortgage lender is legally required to send to the borrower at least 21 days before the mortgage term maturity date, in accordance with the Bank Act of Canada. This document presents the proposed renewal conditions and informs the borrower of their right to negotiate, transfer their mortgage, or repay the balance at maturity.

Frequently Asked Questions

How many days in advance must the lender send a renewal notice?

The Bank Act requires a minimum of 21 days before the mortgage term maturity date. However, most lenders send their renewal offer between 90 and 120 days before maturity, giving you ample time to compare available market options.

Am I obligated to accept my lender's renewal offer?

No, absolutely not. The renewal notice is an offer that you are free to accept, negotiate, or decline. You can transfer your mortgage to another lender at term maturity without penalty. This is the ideal time to shop around and compare rates offered by different institutions.

What happens if I do not respond to the renewal notice?

If you do not respond before maturity, most lenders automatically renew your mortgage for a one-year term at the posted rate, which is generally higher than the negotiated rate. This is why it is essential to actively respond to the notice and negotiate your terms.

Can I negotiate the rate offered in the renewal notice?

Yes, and it may be advisable to always do so. The initial rate proposed in the notice is rarely the best available rate. By contacting your lender or working with an AMF-certified mortgage broker, you can often obtain a rate significantly lower than the one initially proposed.

What should I do if my lender does not send me a renewal notice?

If you have not received a notice at least 21 days before maturity, contact your lender immediately in writing. If the lender is a federally chartered bank, you can file a complaint with the Financial Consumer Agency of Canada (FCAC). For Quebec institutions, contact the AMF.