Your Mortgage Is Reaching the End of Its Term and Here Are Your Options

When your mortgage term is coming to an end, you’re faced with an important decision. This moment—often every three to five years—is your opportunity to review your finances and decide how your mortgage should work for you moving forward. 

At the end of a mortgage term, homeowners typically have three main options,

1. Renew with their current lender

2. Refinance while staying with their current lender

3. Switch to a new lender

Whether you’re renewing with your current lender, refinancing your mortgage, or switching lenders, the decisions you make before your renewal date can impact your finances for years to come.

Understanding the difference between these options can help you make a more informed and potentially a more cost-effective decision.

What to Consider at the End of Your Mortgage Term

Most Manitoba lenders send renewal notices 120–180 days before your mortgage term ends. This window is the ideal time to start planning.

Preparing early allows you to,

• Shop for competitive mortgage rates

• Decide whether you want to change your mortgage structure

• Review your home’s current value

• Consider refinancing to assess your home's equity

• Explore switching lenders without penalties

Waiting until the final weeks limits your choices.

Option 1: Renewing Your Mortgage With Your Current Lender

Renewing your mortgage means continuing with the same lender and renewing the remaining mortgage balance under a new term and interest rate. Mortgage renewal occurs at the end of your mortgage term, typically every 3 to 5 years.

What Renewal Looks Like

• No change to your mortgage amount

• New interest rate and term selected

• Minimal paperwork

Mortgage renewal is different from buying a home—it does not involve a new purchase—but it does provide an opportunity to reassess your financial strategy.

Pros

• Simple and fast process

• No penalties at the end of your term

• Often no appraisal or legal fees

Cons

• Renewal rates may not be competitive

• Limited flexibility to change mortgage structure

Best for: Homeowners who are satisfied with their lender and mortgage setup.

What Might be Required

Documentation is often minimal and may include,

• Confirmation of employment

• Updated banking or insurance details

Some renewals can be completed with little more than a signed agreement.

Shopping for Mortgage Rates at Renewal

At renewal, Manitoba homeowners are not required to accept their lender’s initial offer.

Shopping for mortgage rates may include,

• Comparing fixed vs variable mortgage rates

• Choosing different term lengths

• Adjusting amortization or payment frequency

Even small differences in interest rates can result in significant long-term savings.

Should You Sell Your Home Before Mortgage Renewal?

Mortgage renewal is an important financial decision—and for some homeowners, selling before renewal may make more sense than locking into a new mortgage term.

Selling before mortgage renewal can be a smart option if,

• Rising interest rates would significantly increase payments

• You’ve built strong home equity

• Your home no longer fits your lifestyle or budget

• You’re planning to move within the next year

Selling before renewal can help you avoid penalties, access your equity, and make a clean transition to your next home.

If you’re unsure, a short-term mortgage renewal can provide flexibility while you plan. The key is reviewing your options instead of renewing automatically.

Option 2: Refinancing With Your Current Lender

Mortgage refinancing replaces your existing mortgage with a new one while staying with the same lender, often to change the terms or access equity.. Refinancing can occur at renewal or mid-term (mid-term refinances may include penalties). This option allows you to make changes beyond just the interest rate.

Common Reasons to Refinance

• Access home equity by increasing your mortgage amount

• Consolidate higher-interest debt

• Fund renovations or major expenses

• Adjust amortization or payment structure

Refinancing can improve cash flow but should be evaluated carefully.

What Refinancing Requires

• Income verification

• Credit review

• Property appraisal (in most cases)

Things to Consider

• Refinancing can increase your mortgage balance

• Extending amortization may increase total interest paid

• Penalties may apply if refinancing before term-end

Best for: Homeowners who want to restructure their mortgage or use equity.

How Your Home’s Value Affects Refinancing

Your home’s current market value impacts,

• How much equity you can access

• Refinancing eligibility

• Loan-to-value ratios

Understanding your home’s value before renewal helps determine whether refinancing is beneficial.

Option 3: Switching to a New Lender at the End of Your Term

Mortgage renewal is often the best time to switch lenders. Changing lenders means moving your mortgage to a new financial institution when your term ends. This new loan requires re-qualification based on your income and credit. 

• The mortgage balance stays the same.
• Usually does not involve a penalty.

Why Homeowners Switch Lenders

• Competitive interest rates

• Improved mortgage features
• Flexible payment options

At renewal, switching lenders typically involves no penalty, unlike mid-term mortgage changes.

What Switching Lenders Involves

• Income verification (pay stubs, T4s, or tax returns)

• Credit report

• Mortgage statements

• Property appraisal

• Legal documentation (often covered by the new lender)

• Government-issued ID

Self-employed borrowers may need additional documentation.

How Bank of Canada Interest Rates Affect Your Mortgage Renewal

When your mortgage term ends, the interest rate you receive is influenced by the broader interest rate environment, especially decisions made by the Bank of Canada (BoC).

What the Bank of Canada Does

The Bank of Canada sets the overnight rate, which is the interest rate that major financial institutions charge each other for short-term loans. While homeowners don’t get the overnight rate directly, it serves as the foundation for all consumer borrowing costs, including,

• Variable mortgage rates

• Fixed mortgage rates

• Lines of credit and other loans

When the Bank of Canada raises or lowers the overnight rate, lenders generally adjust their interest rate spreads in response.

How Rate Changes Influence Your Renewal Options

1. Fixed Mortgage Renewal Rates

Fixed mortgage rates are influenced by longer-term bond yields, which are often affected by expectations around future BoC policy.

• If the Bank of Canada raises rates, fixed mortgage rates often rise as well.

• If the Bank of Canada lowers rates, fixed mortgage rates tend to fall or remain stable.

This means the timing of your renewal—whether before or after a rate change—can affect the rate you’re offered.

2. Variable Mortgage Renewal Rates

Variable rates move more directly with the BoC’s overnight rate.

• When the Bank of Canada increases the overnight rate, variable mortgage payments typically rise.

• When the Bank of Canada holds or cuts rates, variable rate borrowers may benefit from lower payments.

Timing your renewal if your term end falls near expected rate announcements could mean locking in a fixed rate to protect you from future rate increases. In a stable or declining rate environment, a variable rate (or a shorter fixed term) could be more cost-effective.

Practical Tips for Homeowners at Renewal

• Watch BoC announcements - Bank of Canada rate decisions are widely reported and often influence mortgage pricing.

• Review economic trends - Inflation, employment data, and economic growth forecasts all affect rate expectations.

• Ask lenders how rates are trending - Your broker or lender can explain how current BoC policy is influencing their renewal offers.

Frequently Asked Questions

When should I start thinking about my mortgage at the end of my term?

Most lenders allow you to review options 120–180 days before your mortgage term ends. This is the best time to shop rates, consider refinancing, or explore switching lenders without pressure.

Do I have to accept my lender’s renewal offer?

No. A renewal offer is optional. You can negotiate, shop other lenders or choose to refinance instead.

What’s the difference between renewing and refinancing?

• Renewing means continuing your mortgage with the same lender at a new rate and term.

• Refinancing means replacing your mortgage to change the structure or access equity.

Refinancing involves more paperwork and approval than a standard renewal.

Can I refinance and switch lenders at the same time?

Yes. You can refinance with your current lender or a new one. Keep in mind that refinancing usually requires income verification, a credit check and a property appraisal.

Is there a penalty to switch lenders when my term ends?

Typically, no. Switching lenders at the end of your term usually does not involve a penalty. Penalties are more common if changes are made mid-term.

Will I need to re-qualify if I switch lenders?

Yes. Switching lenders generally requires full re-qualification, including proof of income, a credit check and an appraisal.

Can I increase my mortgage amount at renewal?

No. A standard renewal does not allow you to borrow more money. To increase your mortgage or access equity, you would need to refinance.

Does my home’s value matter at renewal?

Home value matters most if you plan to refinance or switch lenders. For simple renewals, an appraisal is not always required.

What documents might I need at the end of my mortgage term?

Depending on your option, you may need

• Proof of income

• Employment confirmation

• Credit check

• Mortgage statements

• Property appraisal

• Government-issued ID

Renewals with the same lender often require minimal documentation.

What’s the most common mistake homeowners make at renewal?

Automatically signing the renewal offer without reviewing other options. Even small differences in interest rates can significantly affect long-term costs.

Final Thoughts

The end of your mortgage term isn’t just a formality—it’s a chance to reassess your financial strategy. Whether you renew, refinance, or switch lenders, starting early gives you the time and flexibility to choose what works best for you.

• Renewing keeps things simple

• Refinancing changes how your mortgage works

• Switching lenders helps you shop for better terms

Knowing which option fits your situation can save you money and give you more flexibility.

Making an informed decision at renewal can help your mortgage long-term goals, not just your next term and positioning you for stronger long-term financial outcomes.

Tara Zacharias, REALTOR®