Mortgage Renewal: Does It Happen Automatically?

Mortgage Renewal Denied

Before your mortgage is paid off, you’ll likely need it renewed at least once. This is common practice for home buyers, but it can be a difficult space to navigate. One of the most common questions we get about mortgage renewals is: Does it happen Automatically.

The short answer is yes.  But, it is not something you want to happen, unless you want to throw money away.  Your mortgage renewal is the one opportunity you get to secure a better mortgage.

In Canada, you can only sign a mortgage loan for a term of 10 years max. More often than not, most homeowners opt for a 5-year term with an amortization period of 25 years. Regardless of the term or amortization, you select, you’ll be expected to renew your mortgage at the end of your term.

Life is busy though. What happens if you forget to prioritize your mortgage renewal? In most cases, the term automatically renews on its own. You might be thinking it’s a convenient feature, but it’s not.

There are repercussions. If you let this process happen automatically, you could agree to an interest rate you don’t want to pay. Don’t let this happen, speak to a broker.

Let’s dive into the importance of managing your mortgage renewal and how to make the process simple.

What Is a Mortgage Renewal?

Before we can get into the details, we need to discuss what a mortgage renewal is.

The process is reflective of an actual mortgage. A mortgage is an agreement between you and a lender where the lender gives you the right to a property as long as you pay back the money you’ve borrowed with interest.

The renewal process is taking the outstanding balance of whatever you’ve already paid off and renewing it for (hopefully) a lower mortgage rate, thereby reducing your monthly mortgage payment.

In Canada, nearly 36.3 percent of Canadian homeowners that have a mortgage will renew it at least once before they pay off their home. It’s a common occurrence in Canadian financing.

Automatic Renewal or Reminders

As mentioned above, when your mortgage renewal does happen automatically, it only benefits your lender. If you let the renewal process go, automatic renewals almost always mean you will get a higher rate. In most cases, you won’t receive as low of a rate as you could have if you negotiated your renewal.

It’s best to set reminders to renew your mortgage about 120 days or four months before your current mortgage term’s maturity date. This is the target for most companies to start the renewal process. And, the longer you give yourself to explore your options, the better you will fair during the mortgage renewal process.

Renewing early opens up the opportunity for savings and avoiding paying a prepayment penalty. Determining which lenders are offering different deals will help you decide if you want to renew with the same company or with another lender with a better rate.

This applies to any mortgage registered on your property.  Often homeowners who have more than one mortgage, such as a 1st and 2nd mortgage will find that their renewal dates don’t coincide.  This means that you have to be aware of more than one renewal date.

This can complicate things because you have to decide if you should renew or refinance by combining your mortgages.  A good mortgage broker can help in this department.  They can help determine what the best course of action is and help determine which route is more affordable.

Why Renew a Mortgage?

Aside from continuing to have a home to live in, what else does renewing a mortgage do for you?

Renewing your mortgage can save you money. Renewal negotiations often lead to lower interest rates than you may have with your existing mortgage. This is another department where a mortgage broker can help.  Brokers have no allegiances with any particular bank.

In this way, mortgage brokers can submit your application to a number of lenders to make sure you are getting the lowest rate with the most flexible terms.

Having a mortgage broker act on your behalf at renewal time can prove to be one of the best decisions you can make. Again, when your mortgage renewal does happen automatically, it’s the homeowner that suffers, so be vigilant.

At about 21 days before the end of your existing term, you’ll receive a lender provided renewal statement. This is required but don’t wait until this hits your mailbox. If you forget, you’ll have much bigger problems.

Mortgage Renewal Denied, Now What?

If you currently have a mortgage this doesn’t mean the second time around it can’t be denied.

Denial of your mortgage renewal can happen for several reasons.  These include credit deterioration, loss of income, failure to maintain your monthly mortgage payments, failure to maintain home insurance, or even property tax arrears.

Regardless of why your mortgage isn’t being renewed, it’s imperative that you start exploring other options. While it is important to try to resolve the reason you are being denied a mortgage renewal, your priority should be to find a new mortgage lender, at least in the short-term.

Find a mortgage broker who has experience in challenging mortgage approvals to make sure you have at least a temporary solution. A good mortgage broker will be able to find an alternative lender quickly.

Forward Thinking and Goals

Mortgage renewal should be a goal of any home buyer. You want to progress through the process with the hope of spending less at the end of the road.

Life comes at you fast. Your financial goals are always changing, so make sure your renewed mortgage reflects your current situation. If you have a bit more money in the bank, apply for a shorter loan with higher payments.

Will you be able to pay off your mortgage within this next renewal process? Can you increase payments? What is your family dynamic looking like over the next year?

Consider the bigger picture. The next five years of your life should be reflected in your mortgage rate, term, and product.

Make the Deal

After you’ve checked off all the boxes on your way to mortgage renewal, it’s time to make a decision.

Make sure you’ve gotten some advice from a broker. They’ll help you outline your mortgage needs and agree to an offer that works for your goals.

Switching providers means a little more work, but a better mortgage rate will be a solid payoff. Don’t allow yourself to fall into the trap of automatic renewals. Grab the metaphorical “bull by the horns” and capitalize.

Turned Away No More

If you’re turned away from a mortgage lender, look no further. At, we focus on helping Canadians who were turned away by other mortgage lenders to get the financing they’re looking for.

If you’re struggling to meet your financial obligations, give us a call toll-free at 1-855-668-3074 to explore your options.

Mortgage renewal, home equity loans, refinancing, you name it. We’re there for you when you need it most. Let us show you how 30 years of experience can change your fortunes today. Apply now and have approval in as little as 24 hours!