Most of the conversation around renewals is about the new rate. That matters, but it’s only half of what a renewal can do for you. Your maturity date is also the single best moment in the whole life of your mortgage to pay it down faster, and the choices you make that day shape the next several years.
Here’s how I walk clients through it.
The one day with no prepayment limits
A closed mortgage limits how much extra you can pay during the term. Those limits are your prepayment privileges, and they vary from lender to lender. Most lenders cap them per year, and paying beyond them during the term comes with a charge.
At the end of the term, those limits fall away. The Financial Consumer Agency of Canada puts it plainly: if you’ve been holding off on a large prepayment, you can wait until the end of your term and make a lump-sum prepayment without penalty.
So if you have savings set aside, a bonus, an inheritance, or proceeds from selling something, renewal is the natural time to put it against the balance. Every dollar you pay down at maturity is a dollar you’re not paying interest on for the next term and beyond.
A few things worth thinking through before you do:
- Keep a cushion. Money paid into a mortgage isn’t easy to get back out without a refinance. I’d rather see you keep a comfortable emergency fund than put every last dollar down.
- Weigh your other goals. If you have higher-interest debt or you’re building savings for something specific, those may come first. There’s no single right answer, and it’s worth talking through.
- Timing matters. The lump sum needs to land on or right at your maturity date, so plan it with your lender or with me well ahead of time.
Start early, because the clock runs fast
If your mortgage is with a federally regulated lender such as a bank, the lender must send your renewal statement at least 21 days before the end of your term. That’s not much time to move money around, compare options, and decide on a new term.
The FCAC also notes that if you don’t take action, your renewal may be automatic. I’d much rather you make the choice deliberately. Starting the conversation four to six months out gives you room to line up a lump sum and look at what 50+ lenders can offer, not just the one you’re with.
If you’re weighing whether to stay put or move, my mortgage renewal page goes through switching and what to look for in your renewal letter in more detail.
Keep your payment where it is
Here’s a simple one that’s easy to overlook. If your new payment comes in lower than what you’re paying now, you don’t have to take the lower payment.
The FCAC points out that you can keep your regular payments the same instead of reducing them, which sends more of each payment to principal. You’ve already built your budget around the current amount, so keeping it there is often the least painful way to get ahead.
The same logic applies to amortization. Extending your amortization lowers the payment, but the FCAC cautions that it increases the total interest you pay. If your budget allows it, renewal is a chance to go the other way and shorten it.
Change how often you pay
Renewal is also a clean point to change your payment frequency. An accelerated weekly or biweekly schedule means that, in the FCAC’s words, you make the equivalent of one extra monthly payment per year. If you’re paid every two weeks, it can line up neatly with your paycheque.
Choose a next term built for paying down
This is the part most people skip. When you compare renewal options, the rate is one line on the page. The prepayment terms are another, and if you plan to pay down aggressively, they can matter just as much.
Your mortgage contract may let you increase your regular payments or make lump-sum payments during the term, up to set limits. Those limits differ between lenders and products. When I compare options for you, I look at:
- How much you can prepay each year, and whether it’s based on the original mortgage amount
- How often you can make a lump-sum payment, and on which dates
- How much you can raise your regular payment, and whether you can lower it again later
- Open versus closed. With an open mortgage you can prepay any amount at any time. That flexibility can suit someone expecting a large sum mid-term, such as from a property sale, though open products are usually priced differently, so it’s a trade-off to weigh.
- Portability, in case you move during the term and want to bring your mortgage with you
The FCAC’s advice is to make full use of your prepayment privileges every year. The right product makes that easy to do.
A simple renewal checklist
If you want to use your renewal to get ahead, here’s the order I’d tackle it in:
- Four to six months out: find your maturity date and get in touch so we can start comparing options.
- Decide on a lump sum, if any, and make sure the funds will be ready by the maturity date.
- Settle on your payment: keep it at the current level or raise it if your budget allows.
- Pick your frequency: consider accelerated weekly or biweekly.
- Compare the prepayment terms, not just the rate, across lenders.
- Sign before the deadline so nothing renews by default.
Let’s plan it together
A renewal done well can take years off your mortgage without any dramatic change to your monthly budget. It just takes a bit of lead time and a look beyond the rate.
If your renewal is coming up in the next six months, reach out and we’ll map out the options side by side. There’s no cost to you on conventional mortgages, and I’ll make sure the next term is set up around your goals.