Mortgage Renewals: Fact or Fiction Edition

Okay, so your mortgage is coming up for renewal. Maybe it's in a few months, maybe it's next year and you're already stress-reading articles about it at midnight. It's a big moment, and depending on where you are in life it can genuinely nerve wracking and make your question A LOT of things. Well, luckily, I've put together a little Fact vs Fiction this month to talk exactly about Mortagage Renewels. Remember, I'm an agent, not a mortgage broker so I'm not the expert, but in my experience dealing with clients,and working alongside brokers here are a few things I've learned. When the time comes, I'm happy to provide a few options of trusted and experienced agents to help guide you and make an informed decision.

In the meantime...

Mortgage renewals stress people out more than they probably should. And a big part of that is because there's a lot of noise out there. Your neighbour has an opinion. Your cousin who "knows about finance" has an opinion. The internet has approximately 4,000 opinions, many of them contradictory. And of course, Real Estate agents like me always want to chime with their two cents ;)

So without further ado, here are a few Fact vs Fiction bits about Mortgage Renewels :

Fact #1: "Renewal time is a great moment to reassess your whole mortgage setup."

100% true, and honestly the most underused opportunity in homeownership.

Maybe your life has changed since you signed five years ago. Maybe you want to increase your payments to pay things down faster. Maybe you want to access some of your equity. Maybe fixed made sense then but variable makes more sense now, or vice versa. Maybe your original term length was just the default and you never really thought about whether it was right for you.

Renewal is basically a built-in checkpoint to make sure your mortgage still fits your life. Use it like one.

Fiction #1: "I just have to sign whatever my bank sends me."

Sure, because the banks always are looking out for you right? I think we both know the answer to that....Your bank is going to mail or email you a renewal offer, usually 120 days before your term ends, and it is going to look very official and very final. It is not final. That offer is essentially your bank hoping you'll just sign and send it back without asking any questions.

Don't do that.

You have every right to negotiate, and you have every right to shop around. In fact, in many cases, just telling your bank you're considering other options is enough to get a better rate. You did five years of business with them. Use that, see how they respond, and then shop around. You can always come back to them later.

Fact #2: "My credit score still matters at renewal."

Always and forever my friends. Such is life unfortunatley. Even if you've been with the same bank for years, they are going to look at your financial picture again at renewal. It has been a few years afterwall and a lot can change (family, lifestyle changes, employment, etc.). It's not personal, it's just good business practice. If your credit score has taken a hit, your income situation has changed, or you've taken on a lot of new debt, that conversation with your lender could look very different than you're expecting.

This is especially important right now for anyone who bought when rates were low and is renewing into a higher rate environment. The stress test may apply again if you switch lenders, so it's worth knowing where you stand financially before you start shopping.

Fiction #2: "Switching lenders at renewal is a huge hassle."

This one stops a lot of people from even trying, and it really shouldn't. I get it, life gets crazy, and looking around can seem daunting and time consuming when really, you have other important things to do. But hey, this is kind of important too, and really not that big of deal. Switching lenders at renewal is actually one of the smoothest moves you can make in the mortgage world because you're not breaking your mortgage mid-term. There's no penalty. The new lender typically handles most of the paperwork. It's genuinely not that dramatic.

Now, does it take a little effort? Sure. But "a little effort" and "huge hassle" are not the same thing, and the difference in rate you might find elsewhere can be very much worth it over a five year term.

Fact #3: "Working with a mortgage broker can get you a better deal than going directly to your bank."

True, and more often than people realize. A broker is shopping multiple lenders at once on your behalf. They're not tied to one institution's products or rates, which means they can find options your bank simply won't offer you. And in most cases, their services don't cost you anything directly since they're compensated by the lender. I know banks may seem like the traditional and "safe" way of doing things, but that's an old way of thinking. Expand your options, be open to new ideas and look for the better deal. It might just pay off (literally).

Fiction #3: "Rates are rates. They're all pretty much the same."

They are absolutely not. Rates vary between lenders, between fixed and variable, between term lengths, and even based on how you apply (broker vs. going directly to a bank). A difference of even 0.25% sounds tiny until you run it out over a five year term on a $700,000 mortgage. Suddenly it's not tiny at all.

This is honestly where working with a good mortgage broker earns its keep. They're shopping multiple lenders at once so you're not doing five separate conversations yourself. Start early, get options, take your time, and get the best deal for you and family.

Speaking of Mortgages... Let Me Introduce You to Someone

Look, I'm a real estate agent. I know a lot about the buying and selling side of things. But when it comes to the deeper mortgage strategy stuff, I lean on people who eat, sleep, and breathe this for a living.

One of those people is my guy Babujie Arulsubramaniam (Babu for short) over at Mortgage Scout. I work with lots of Brokers but recently had a very good experience with Babu and wanted to give him a shout out.

Babu is a good guy and has been in the mortgage industry for over 8 years and he's not your typical "here's your rate, sign here, bye" kind of broker. He's genuinely one of those people who gets into the weeds with his clients and finds strategies most people don't even know exist. The kind of stuff that can save you a serious amount of money over the long run, not just at renewal time.  When I sat down with Babu recently, he had an entire excel spreadsheet going over payments and options and if you know me, financial jargon usually goes over my head but Babu was able to break it down and explain it to me in a simple and easy to understand way (aka The Tyson Way 😉)

Here's a taste of what he actually helps people with:

For homeowners:

• Mortgage restructuring to tackle high interest debt and plan around big life moments like kids' education, weddings, and other "wait, how much does that cost?!" milestones
• Setting up an offset mortgage account that can shave years off your mortgage without locking in your cash through regular prepayments

For investors (or people who want to be):

• Rental Cash Damming, which is a strategy that can help pay off your mortgage 8 to 12 years sooner by using a rental property to convert your principal residence mortgage into a tax deductible one, then using those tax refunds to knock down your balance faster
• Running the numbers on real estate investing in a way that actually makes sense for your life, your retirement, and your sanity (and yes, this can be layered with the Cash Damming strategy for maximum effect)

If you're coming up for renewal and want someone who's going to do more than just hand you a rate, Babu is worth giving a call.

Here's how to reach him:

Babujie Arulsubramaniam, Mortgage Broker Mortgage Scout (Lic# 13060)Phone: 416-931-5570Email: babujie.a@mortgagescout.ca

Bottom Line

Don't just sign the renewal offer your bank slides across the table. Ask questions. Shop around. Talk to a broker. And if you want a second opinion on what you're being offered, honestly, just reach out. That's what I'm here for. I have many other Brokers I work with and trust and I'm always happy to make an introduction.

Your mortgage is probably your biggest financial commitment. Treat the renewal like it matters, because it does.

Ok! That's it for now. Thanks for reading and have a great day! 👋 - Tyson CR

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