The days of ultra-low interest rates are behind us, and renewing your mortgage in this environment can feel overwhelming. But don’t worry — there are options to help you navigate the process and secure the best rate.
Rates Are Coming Down, But… While mortgage rates are finally easing — including variable rates linked to Bank of Canada decisions — your renewal rate will likely still be higher than what you’re used to paying. That’s why it’s crucial to shop around for the best rate and terms at renewal time.
Good News: Stress Test Relief for Switches Starting November 21, 2024, lenders won’t have to apply the federal stress test to uninsured mortgage switches at renewal. This opens up more competitive options for homeowners looking to switch lenders without re-qualifying under the stress test, giving you more flexibility to find a better deal.
Additional Renewal Help Coming in January 2025 If you’re considering building a secondary suite, new federal rules effective January 15, 2025, will allow eligible homeowners to refinance up to 90% of their improved property value (capped at $2M) with a 30-year mortgage extension. This can provide extra funds for renovations while keeping your payments manageable.
Looking for a Lower Rate? Here’s How to Get It When your mortgage is up for renewal, you don’t have to settle for your current lender’s offer. You may be able to switch to another lender without going through the stress test. Plus, if your mortgage was insured at the time of origination and you haven’t refinanced or changed your amortization, you may still qualify for a lower insured rate.
Stretch Your Amortization to Lower Payments By increasing your amortization (how long you take to pay off your mortgage), you can reduce your monthly payments and improve your debt ratios, making it easier to switch to a better mortgage rate. Once you’re settled, you can use pre-payment privileges to make extra payments and get back on track faster.
Refinancing for More Breathing Room If switching lenders isn’t an option, refinancing with your current lender can help extend your amortization up to 25 or 30 years, lowering your monthly payments. You’ll need at least 20% equity in your home, and legal fees or an appraisal may apply — but it’s a solid strategy for managing a higher renewal rate.
Go Short for Flexibility If you’re hoping rates will drop soon, consider a shorter term, like 2 or 3 years. While short-term rates might be higher, they offer the chance to renew into better rates sooner, without locking in for a full 5 years.
Variable Rate Mortgages: A Good Option? With rate hikes slowing, a variable rate mortgage could offer more flexibility and potential savings. If rates drop during your term, your payments could go down too — a benefit that fixed-rate mortgages don’t offer.
Talk to a Trusted Expert At Canadian Mortgage Professionals, we’re here to guide you through your mortgage renewal. Whether you need help finding a better rate, extending your amortization, or refinancing, our knowledgeable team can tailor a solution to your needs.
Don’t feel stuck — reach out to us today for expert advice and personalized mortgage options. We’re here to help, online or in person!!!
