What is a Mortgage Renewal?

Couple Applying for a Mortgage

Aside from mortgage interest rate, you will likely hear two other numbers related to your mortgage: amortization and term.

Amortization is the total amount of time until your mortgage is fully paid.

Term is the amount of time your mortgage interest rate will remain the same (if you have a fixed rate mortgage).

Once your term has expired, you will be required to renew your mortgage at current rates, switch your mortgage to another financial institution or you can pay off your mortgage in full.

Here are a few things to keep in mind when preparing to renew your mortgage.

Consider What Mortgage Type Works for You

While the majority of people choose a five year fixed rate mortgage to keep their mortgage payments consistent for a longer period of time, it may make sense for you to choose a different term depending on your personal circumstances.

Shorter terms carry lower interest rates, but also have the additional risk of rates rising upon your next renewal.

Another option to consider is a variable rate mortgage where your interest rate fluctuates with the prime lending rate. A variable rate mortgage is open, which means you can make additional payments, pay off the mortgage or switch to a fixed term, at any time, without penalty, giving you complete flexibility.

Consider your Payment Schedule

When renewing your mortgage, one of the things you’ll have to choose is how frequently you make mortgage payments.

Standard mortgage payments are monthly payments, but you can choose semi-monthly, bi-weekly or weekly payments depending on your preference.

Start Looking Early

If you’re looking to switch your mortgage, it’s best to speak to a Cambrian Lending Specialist three to six months before your current mortgage term ends. This will give you time to explore your options and find the best rate and term for you, and go through the process of switching your mortgage prior to your renewal date.

Lower your mortgage payment by switching to Cambrian’s low mortgage rate! Plus, we’ll pay your transfer fees.