5 Costly Mistakes to Avoid at Mortgage Renewal

Your mortgage renewal is coming up, and your lender just sent you a letter with a new rate. Before you sign it and move on with your life, know this: most homeowners leave thousands of dollars on the table by simply accepting what's offered. Here's how to avoid that mistake.

Why Renewal Matters

Your renewal is your opportunity to renegotiate. Lenders count on inertia—the fact that most people take the easy path and just sign. Don't be most people.

Mistake #1: Not Shopping Around

Your current lender knows switching is inconvenient. Their renewal offer often isn't their best rate.

What to do instead:

• Get quotes from 3-5 other lenders
• Use competing offers to negotiate
• Potential savings: 0.25% to 0.50% on your rate

On a $400,000 mortgage, saving just 0.25% means $1,000+ per year.

Mistake #2: Waiting Until the Last Minute

Starting the renewal process too late puts you at a disadvantage.

Better approach:

• Begin 120 days before maturity
• Get pre-approved elsewhere to lock in rates
• Use the time to negotiate without pressure

Don't Just Sign That Letter

Before you sign anything, get a free rate comparison. You might be surprised how much you can save.

Mistake #3: Ignoring the Fine Print

Not all mortgages are created equal. Beyond the rate, consider:

• Prepayment privileges – Can you pay extra?
• Portability – Can you transfer if you move?
• Penalty calculations – How are they computed?

A slightly higher rate with better terms might actually save you more.

Mistake #4: Not Reassessing Your Situation

A lot changes in 5 years. At renewal, ask yourself:

• Has your income changed?
• Are you planning major purchases or renovations?
• Do you want to pay off your mortgage faster?
• Has your home value increased significantly?

Your renewal might be the perfect time to refinance and access equity instead of just renewing.

Mistake #5: Going It Alone

A mortgage broker works for you, not the banks:

• Access rates you can't get directly
• Handle all paperwork and negotiations
• Know which lenders offer the best terms
• Cost you nothing (lenders pay broker fees)

The difference between a bank and broker can mean significant savings.

FAQ

Q: Can my lender refuse to renew my mortgage?
A: It's rare, but possible if your situation has deteriorated significantly. Most lenders renew without re-qualification.

Q: Do I need to requalify under the stress test?
A: Not if you stay with your current lender. Switching triggers a new application and stress test.

Q: What if I'm in a variable rate and want to lock in?
A: At renewal, you can choose any rate type. This is the perfect time to reconsider fixed vs. variable.

Q: Should I consider a shorter term at renewal?
A: Possibly. Shorter terms often have slightly lower rates and give you flexibility to renegotiate sooner.

What's Next

Don't sign that renewal letter without checking your options first. Get a free renewal rate comparison to see how much you could save.