The Mortgage Renewal Trap

When your mortgage term comes to an end, your lender will typically send you a renewal letter in the mail or by email. It usually looks simple: a few boxes checked off, an interest rate, a new payment amount, and a space for your signature. Many Canadians sign it without thinking twice because it feels like the easiest way to move forward.

But here’s the problem: that “easy” choice could cost you thousands of dollars over your next term.

Most lenders don’t lead with their best rate when offering a renewal. They know that many borrowers are busy and will take the path of least resistance. By doing so, you may be locking yourself into a higher rate and paying significantly more in interest than you need to.

Why the Renewal Letter Isn’t Your Best Option

Think of it this way—your lender wants to maximize their return. Sending you a renewal form with a less-than-competitive rate is their way of seeing if you’ll accept it. Many homeowners do, either because they don’t know better, or because they assume switching is complicated.

The truth is, renewing with your current lender isn’t always bad—but you should never accept their first offer without comparing it to the rest of the market.

The Power of Shopping Around

This is where a mortgage broker becomes invaluable. Instead of you calling multiple banks, credit unions, and alternative lenders, a broker does the legwork for you. Brokers have access to dozens of lending partners, including many that you may not even be aware of as a consumer.

Not only can a broker find you a lower rate, but they can also secure better terms—like more flexible prepayment options or reduced penalties—that can save you money down the line. And here’s the best part: in most cases, working with a mortgage broker costs you nothing. Brokers are compensated by the lender once your mortgage is finalized.

More Than Just the Rate

While interest rates are usually the headline factor, the “fine print” matters too. Renewal is a great opportunity to reassess your financial goals. Do you want to pay off your mortgage faster? Do you need lower payments for cash-flow flexibility? Are you planning a major life change, like retirement or starting a business?

A broker will review your whole situation and help structure your mortgage in a way that works for your future—not just your present.

Don’t Wait Until the Last Minute

One of the biggest mistakes homeowners make is waiting until their renewal letter arrives before exploring options. By then, you’re usually only 3–4 weeks from your renewal deadline, and it can feel rushed. Ideally, you should start reviewing your renewal options 4–6 months before your term ends. That way, you’ll have time to compare offers, lock in a rate early if needed, and approach your renewal from a position of strength.

The Bottom Line

Your mortgage renewal is more than just paperwork—it’s an opportunity to save money, gain flexibility, and align your mortgage with your financial goals. Don’t let convenience trap you into paying more than you need to.

Before signing your renewal letter, take the time to explore your options with a mortgage broker. A quick conversation could save you thousands over the life of your mortgage.