When you refinance your mortgage, you are essentially taking out a new mortgage with a new lender and using that money to pay off your old mortgage with your old lender. If you don’t want to renew your term with your current lender, you can also refinance your mortgage with another provider. You can also use our mortgage penalty calculator. If your lender isn’t on this list, you can call them and ask for your pre-payment penalty. Here are the pre-payment calculators for each primary lender in Canada. If you aren’t ready to pay the penalty to be mortgage-free, now might not be the best time to pay off your mortgage. Still, it would be best to calculate your exact pre-payment penalty, because it could be in the thousands or tens of thousands of dollars, depending on various factors. Usually, the closer you are to the end of your term, the smaller your pre-payment penalty is. You’ll also pay a pre-payment penalty when refinancing your mortgage. A pre-payment penalty is a fee you’ll pay to break your mortgage term and pay off your mortgage. If you’re considering paying off your mortgage at renewal instead of committing to another term, you’ll need to consider pre-payment penalties. Here is how early you can renew for each major lender in Canada: Most lenders in Canada allow you to renew your mortgage term between 120 and 180 days before your current term expires. That said, you can renew your mortgage much earlier than 30 days before your term expires. Just accept the terms and your mortgage renews for another period. Your mortgage renewal letter simplifies the process of renewing. Usually, in the last 30 days before your current mortgage term expires, you’ll receive a renewal letter from your lender outlining your new mortgage term, including the interest rate that you’ll receive if you choose to renew. Mortgage renewal is the process of agreeing on a new mortgage term with your lender. So is paying off your mortgage at renewal the right choice for you? But it does happen, especially for Canadians who receive unexpected windfall cash.
The third option, paying off your mortgage entirely, is less common because few Canadians have access to enough money to pay off the remaining balance of their mortgage in one lump sum payment. You can renew with your current lender, you can shop around and switch to a new lender, or you can pay your mortgage off entirely. It’s common for Canadians to have several terms over the entire amortization period of their mortgage.Īt the end of the term, you have a few options. For example, a common mortgage term is a 5-year fixed, which means you will pay a fixed mortgage interest rate for five years. Your mortgage term is shorter than the amortization period and represents the length of time your current mortgage rate is locked in with your current lender. The other length of time you’ll need to keep in mind is the term. You can use our amortization calculator to generate multiple amortization schedules based on different amortization scenarios to better understand what your mortgage payments would be. The first is your amortization period, the total length of time before your mortgage is completely paid off.Īmortization periods in Canada are usually between 20 and 30 years for first-time homebuyers. You’ll need to keep in mind two critical lengths of time when you have a mortgage in Canada. This post was originally published on October 6, 2021, and was updated on December 30, 2022.
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