Mortgage Renewal Timeline: When to Act in Canada

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Mortgage Renewal Timeline: Essential Action Windows

Mortgage renewal occurs at the end of each term, typically every 3 to 5 years in Canada. It is a pivotal moment that will déterminé your financing conditions for the coming years. Yet, thousands of Canadian borrowers sign their bank's renewal offer each year without negotiating, potentially losing thousands of dollars. A proactive, timeline-based approach is the key to maximizing your savings.

The Optimal Renewal Calendar

120 days before maturity: the rate hold window: Most lenders and mortgage brokers offer 120-day rate holds. This means you can lock in the current market rate with no commitment. If rates drop before your renewal date, you get the lower rate. If rates rise, your held rate is protected. This is the ideal time to contact an AMF-certified mortgage broker.
90 days before maturity: the comparative analysis: At this stage, your broker should have completed a comparative analysis of offers from multiple lenders. Compare not only rates but also conditions: prepayment privileges (10%, 15%, or 20% per year), loan portability, payment flexibility, and penalty clauses. A 0.10% difference on a $400,000 loan represents approximately $400 per year.
60 days before maturity: the decision and transfer initiation: If you decide to transfer your mortgage to a new lender, the process must be launched now. The new lender will conduct a property appraisal (if required), verify your credit file and income, and send instructions to the notary. In Quebec, the notary must prepare the mortgage deed and complete verifications at the Land Registry.
30 days before maturity: final confirmation: All documents should be signed and the transfer process in the final stages. If you are staying with your current lender, this is the last moment to negotiate conditions. Never accept the first rate offered without comparing with at least two or three other market offers.
Maturity day: the renewal takes effect: Your new term begins with the negotiated conditions. If no action was taken, the lender will automatically renew for a one-year term at their posted rate. This rate is generally 0.5% to 1.5% higher than the best negotiated market rates.

The Lender's Legal Obligation

Under Canadian fédéral regulations, federally regulated financial institutions (chartered banks) must send a renewal notice at least 21 days before the mortgage term maturity date. In Quebec, the Civil Code (CCQ) and the Consumer Protection Act (CPA) offer additional protections. However, this 21-day period is a legal minimum that provides insufficient time to shop effectively. This is why it is essential to take action early.

Transferring to a New Lender: Process and Costs

No prepayment penalty applies if the transfer occurs on the exact term maturity date.
The new lender frequently absorbs legal fees (notary) and appraisal fees as part of promotional transfer offers.
In Quebec, a notary's involvement is mandatory for preparing and registering the new mortgage deed at the Land Registry.
The complete transfer process typically requires 30 to 45 business days, hence the importance of initiating it at least 60 days before maturity.
If your loan is a conventional charge (standard mortgage), the transfer is generally simpler than for a collateral charge loan.

Frequently Asked Questions

When should I start preparing for my mortgage renewal?

Ideally, begin 120 days (4 months) before your term maturity date. This is when most lenders and brokers can secure a rate hold to protect you against increases. It also gives you time to compare offers, consult an AMF broker, and if needed, initiate a transfer process to another lender.

What happens if I do nothing before my term expires?

If you do not respond to your lender's renewal offer, your mortgage will generally be automatically renewed for a one-year term at the bank's posted rate. This rate is almost always significantly higher than negotiated rates or those offered through brokers. You also lose the opportunity to renegotiate your loan conditions.

Can I switch lenders at renewal without a penalty?

Yes. At the exact maturity of your term, you can transfer your mortgage to another lender without paying a prepayment penalty. The new lender often absorbs transfer costs (legal and appraisal fees) as part of their offer. However, the process must be initiated early enough (60 to 90 days before) to be completed on time.

Can my lender refuse to renew my mortgage?

Yes, although it is rare. A lender can refuse renewal if your financial situation has significantly deteriorated, if the property value has dropped substantially, or if you have outstanding payments. In this case, you will need to find another lender, which underscores the importance of starting the renewal process early and maintaining your credit health.

What role does the mortgage broker play at renewal?

The AMF-certified broker compares offers from dozens of lenders to find the most competitive rate and conditions suited to your situation. Their services are generally free for the borrower, as they are compensated by the lender. They can also negotiate favorable conditions such as prepayment privileges, loan portability, and repayment clauses.

Can I modify my mortgage conditions at renewal?

Yes, renewal is the ideal time to reassess all conditions: rate type (fixed or variable), term length, payment frequency, prepayment privileges, and remaining amortization amount. If you switch lenders, you have full flexibility. If you stay with the same lender, the possible changes depend on their policies.