MoneySense Toolkit: The mortgage renewal calculator

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Mortgage renewal can be a stressful time for Canadians. There are a lot of decisions to be made, including whether or not to stick with the same lender. A mortgage renewal calculator can help simplify the process and ensure you make an informed and financially beneficial decision that will serve you well for years. 

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A mortgage renewal calculator allows you to compare the savings or fees that come with different mortgages, based on a given amortization period, payment frequency and interest rate. It’s one of the easiest ways to determine if your current mortgage is working for you or if it’s time to find one that better suits your needs. 

What is a mortgage renewal?

When your mortgage term ends, if you’re not at the end of your amortization period or haven’t paid off your mortgage in full, you’ll need to renew your mortgage contract. This is a good time to review your current mortgage agreement and to see if there are maybe better options out there for you. 

The process for renewing your mortgage

If your lender is a bank or federally regulated institution, it should send you a renewal notice at least 21 days before your current mortgage term is set to expire. The statement will contain information including your remaining mortgage balance, the interest rate, payment frequency, term and any potential fees that come with renewing for another term. 

Usually, your lender will also send you a new mortgage contract that you can sign indicating you wish to renew. Note that if you don’t renegotiate or change providers your mortgage contract may be set to automatically renew. 

Things to consider when renewing your mortgage

While it may be easier to stay with the same mortgage provider, that’s not always the best decision financially. Here are some actions you should take before deciding to renew or not:  

  • Use a mortgage renewal calculator to get a comprehensive overview of your renewal options and determine whether you can save money or get more favourable terms. 
  • Remember that you don’t have to stick with the same lender. It often pays to shop around or consult a mortgage broker to see if you can get a more favourable rate. 
  • Investigate the costs or penalties for changing lenders, as there may be fees attached.
  • Consider whether it’s worth changing your amortization schedule to either lower or increase your payments. A longer amortization can create more room in your budget, while a shorter one will pay off your mortgage faster and save you on interest fees. 
  • Give yourself plenty of time to research your mortgage options (i.e., don’t wait until your renewal notice arrives). 

Renewing versus refinancing your mortgage

If you stay with the same lender and stick to the terms of your original contract, that’s considered a renewal. If, however, you want to change the terms of your mortgage before the term expires, that’s called refinancing. 

You can attempt to renegotiate your agreement at any time for better terms, but there may be costs associated with refinancing, especially if you break your mortgage contract to go with a different provider. Possible fees include:

  • Discharge fees from your current lender
  • Registration and home appraisal fees from a new lender 
  • Other administrative and legal fees
You’re 2 minutes away from getting the best mortgage rates in CanadaAnswer a few quick questions to get a personalized rate quote

I’m buying a homeI’m renewing/refinancing

You will be leaving MoneySense. Just close the tab to return.

Other MoneySense mortgage calculators:

  • Mortgage affordability calculator
  • Mortgage payment calculator
  • Mortgage down payment calculator
  • Mortgage penalty calculator
  • Land transfer tax calculator
  • Mortgage refinance calculator
  • CMHC mortgage insurance calculator

The post MoneySense Toolkit: The mortgage renewal calculator appeared first on MoneySense.

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