Your Mortgage Is Up for Renewal:
Here's Why You Shouldn't Just Sign the Bank's Letter
A few months before your mortgage term ends, a renewal letter shows up from your bank. It's got a new rate, a signature line, and a deadline. For a lot of people, it feels like paperwork, sign it, mail it back, move on. That instinct is exactly what costs homeowners money every single renewal cycle.
What's actually happening
Your bank's renewal offer is written to be convenient for them, not necessarily competitive for you. It's usually based on their posted rate at the time, and it rarely reflects the best rate available to you in the market because there's no incentive for them to show you a better deal when they're betting you'll just sign what's in front of you.
The myth that keeps people signing anyway
The most common reason people don't shop their renewal is the belief that switching lenders is expensive or complicated, legal fees, appraisal costs, hassle. Here's the reality: most straightforward mortgage renewals cost nothing to switch to a new lender. No penalty, no legal fees in most cases, because you're not breaking your mortgage mid-term your term is simply ending and you're free to place the next one wherever makes sense.
What you should actually do 120 days out
Don't wait for the letter. Start the conversation 4 months before your renewal date that's typically the window brokers can secure a rate hold for, and it gives you time to actually compare options instead of scrambling near the deadline.
Get an outside comparison. As an independent broker, we can show you what multiple lenders are actually offering, not just the one you've been with by default.
Ask what's changed in your life. Renewal is also a natural checkpoint to reconsider your mortgage structure — maybe a HELOC or Offset Strategy makes sense now, maybe your amortization should change, maybe you want to switch from variable to fixed. It's a decision point, not just a signature.
Consider whether a blended rate applies. If you're actually renewing right on schedule this doesn't apply, but if you're eyeing an early move, it's worth understanding how blended rates work as an alternative to breaking early.
What staying with your current bank could still be the right call
To be clear, sometimes your existing lender does come back with a genuinely competitive offer, especially once they know you're shopping around. The point isn't "always switch," it's "always compare." Signing without comparing is the actual mistake, not staying put after a fair comparison.
What happens if you actually do nothing
If you let the renewal date pass without signing anything, most lenders will automatically roll you into a new rate, often their posted variable rate, which is rarely the most competitive option available. This isn't a good outcome, and it's a real reason not to procrastinate the decision entirely, even if you're not ready to commit to a specific plan yet.
FAQ
How far in advance should I start looking at renewal options? Ideally 90 to 120 days before your term ends that's typically the window most lenders will hold a competitive rate for you, giving you time to actually compare rather than deciding under deadline pressure.
Will switching lenders at renewal hurt my credit score? A new lender will typically run a credit check as part of the switch, which causes a small, temporary dip — similar to any other credit inquiry. It's a minor trade-off against the potential savings of a better rate.
What if I want to make changes beyond just the rate at renewal? Renewal is actually one of the easiest times to make structural changes switching from variable to fixed, adjusting your amortization, or considering a new strategy since you're not breaking anything mid-term to do it.
The bottom line
Your renewal letter isn't a formality it's a negotiation you didn't know you were having. Treat it like the financial decision it actually is, and it can work in your favour instead of the bank's.
Renewal coming up? Reach out before you sign anything let's see what's actually out there for you.
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