Your Mortgage Is Renewing
A renewal letter is not a bill — it's a negotiation window, and it's the cheapest chance you'll get to change your mortgage. Most people sign the first offer. That's the expensive habit.
The short answer
At renewal your term ends and you sign a new one on the remaining balance. You can accept your lender's offer, negotiate it, switch lenders for a better rate, or refinance to change the amount and structure. Switching or refinancing at renewal usually avoids a prepayment penalty, which is why the renewal window is the best time to restructure.
Your four options at renewal
- Sign the offer as-is. Fastest, and usually not the best rate available.
- Negotiate with your current lender using competing offers as leverage.
- Switch lenders for the same balance — often with the new lender covering the switch costs.
- Refinance to change the balance too: consolidate debt, access equity or reset amortization.
Start 120 days out
Most lenders will hold a rate for you 90 to 120 days before renewal. Starting early gives you time to compare, gather documents and, if a restructure makes sense, complete it without a penalty.
Renewal when your payment is about to jump
If you're renewing off a much lower rate, the new payment can be a genuine shock. Options include a longer amortization to soften the increase, consolidating other debt so the total monthly picture works, or a shorter term while you wait out the rate cycle. There is almost always more than one path — the worst outcome is finding out three weeks before the deadline.
Common questions
What happens when your mortgage renews?
Your term ends and the remaining balance needs a new term at a new rate. Your lender sends an offer, and you can accept, negotiate, switch or refinance. If you do nothing, many lenders roll you into a term automatically — usually not at their best rate.
Mortgage renewal vs refinancing — what's the difference?
A renewal keeps the same mortgage balance with a new term. A refinance changes the balance or structure, often to access equity or consolidate debt. Doing the refinance at renewal time typically avoids a penalty.
Should I refinance before my mortgage renewal?
Only if waiting causes real harm. If your renewal is within a few months, waiting usually avoids a prepayment penalty. If you're drowning in high-interest payments now, the penalty may be worth paying — that's a numbers conversation.
Your Estimate
- Mortgage amount
- $647,640
- Payment (Monthly (12/yr))
- $3,616.99
- Monthly equivalent
- $3,616.99
- Total monthly housing cost
- $4,086.99
- Default insurance premium added
- $17,640
- Stress-test payment at 6.59%
- $4,373.44
- GDS / TDS at qualifying rate
- 41.5% / 47.1%
- Total interest over amortization
- $437,456
- Estimated closing costs (~1.5%)
- $10,500
These ratios are above typical insured limits — some lenders allow more, and structure matters.
Insured mortgages are stress-tested at the greater of your rate plus 2% or 5.25%. Half of condo fees are included in the ratio calculation, as most lenders do.
Important: This is an illustration, not a mortgage approval or financial recommendation. Actual results depend on interest rates, penalties, lender guidelines, qualification and your full financial situation.
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