If you’re approaching your mortgage renewal, there’s never been a better time to explore your options. With recent policy changes at the end of 2024 that make switching lenders easier and a market offering competitive mortgage renewal rates, you can now secure a better deal on your mortgage renewal.
In this guide, we’ll walk you through the latest policy updates, share current rate trends, and offer practical tips to maximize your savings—whether you’re in Ontario, Alberta, British Columbia, or anywhere in Canada.
New Policy Changes Making Mortgage Renewals Smoother
On November 21, 2024, the Office of the Superintendent of Financial Institutions (OSFI) introduced significant changes to simplify the mortgage renewal process for uninsured mortgage holders. Here’s what you need to know:
🔹 No Stress Test for “Straight Switches”:
- What It Means: If you’re switching from one federally regulated lender to another while keeping the same loan amount and amortization schedule—a process known as a “straight switch”—the new lender won’t require a new mortgage stress test.
- Benefit: This change removes a major hurdle, allowing you to explore competitive mortgage renewal rates without the extra qualifying steps.
🔹 Purpose of the Change:
- The goal is to enable homeowners to switch to a lender offering better terms or lower rates without the burden of an extra stress test.
- This policy is part of a broader effort to make homeownership more accessible and affordable for Canadians.
Full Policy Changes Details Here: New Mortgage Rule Changes December 2024
Current Mortgage Renewal Rates
Understanding the current market rates is crucial when it comes to negotiating your mortgage renewal. Here’s a snapshot of what you might expect in today’s market.
Current Rate (Approx.)
- 3-Year and 5-Year Fixed Rate Renewals: 3.74% – 4.24%
- 3-Year and 5-Year Variable Rate Renewals: 3.90% – 4.20%
Note: These rates are approximate and can vary based on your financial profile, the lender, the property, the location, and regional market conditions.
Fixed vs Variable Mortgage Renewal Rates
When renewing your mortgage, you typically face the choice between fixed and variable rates. Understanding these differences helps you choose the option that best fits your financial situation and risk tolerance. Here’s a quick comparison:
Fixed Rate Renewals
Pros:
- Stability: Your interest rate remains constant, making monthly budgeting easier.
- Predictability: Consistent payments regardless of market fluctuations.
Cons:
- Missed Opportunities: You may not benefit from further rate cuts.
- Bond Yields Influence: Fixed rates are linked to government bond yields, which may not reflect the most recent market changes.
Variable Rate Renewals
Pros:
- Flexibility: Rates can adjust more quickly with market changes, potentially lowering your monthly payments when rates drop.
- Immediate Savings: Recent rate cuts, like the one from 3% to 2.75%, can have a direct impact on your expenses.
Cons:
- Payment Fluctuations: Your monthly payments can vary, which might make budgeting challenging.
- Risk of Increase: If market rates rise, your payments could increase accordingly.
Tips to Maximize Your Mortgage Renewal Rates
Now that you know about the recent policy changes and have an idea of the current rates, here are some actionable steps to help you secure the best mortgage renewal deal:
1. Start Early – Shop 4-6 Months in Advance
🔹 Plan Ahead: Begin your search at least 4-6 months before your renewal date to avoid any last-minute surprises.
🔹 Expert Advice: Consider consulting a mortgage broker for personalized advice and to leverage their experience and lender network. Let them shop and negotiate for you.
2. Gather Your Mortgage Details
🔹 Know Your Numbers: Review your current mortgage documents to understand your interest rate, monthly payments, fees, and any penalties for early repayment.
🔹 Preparation is Key: Being well-prepared gives you the leverage needed to negotiate a better deal.
3. Shop Around and Compare Offers
🔹 Don’t Settle: Always compare multiple offers. With the new OSFI changes, a “straight switch” can help you bypass the stress test and unlock more competitive rates.
🔹 Focus on Your Needs: Look for offers that match your financial goals, whether that’s a fixed rate for stability or a variable rate for potential savings.
4. Get Pre-Approved Before Rates Rise
🔹 Why It Matters: Interest rates fluctuate based on the economy and government policies.
🔹 What to Do: Secure a rate hold or get pre-approved to protect yourself before rates increase. A small rate hike could cost you hundreds per month in extra payments.
5. Negotiate for Better Terms
🔹 Leverage Competing Offers: Use competitive quotes from different lenders to negotiate a lower rate with your current bank.
🔹 Speak Up: Don’t be afraid to ask for better terms. Remember, every percentage point saved can add up to significant long-term savings.
6. Review and Finalize
🔹 Read the Fine Print: Make sure you understand all the terms and conditions before signing on the dotted line.
🔹 Confirm Your Choice: Ensure that the rate you’re locking in is the best option for your unique situation.
Working with Effortless Mortgage
Mortgage renewal is not the time to get lazy and take the first offer you receive from your current lender. It is the time to shop, negotiate to get better deals and save.
With the recent policy changes effective November 21, 2024, securing the best mortgage renewal rates has never been easier. The removal of the stress test for uninsured mortgage holders doing a straight switch allows you to explore competitive offers without extra hurdles. Whether you opt for a fixed or variable rate, the key is to start early, shop around, and negotiate for the best possible deal.
At Effortless Mortgage, we take the guesswork out of renewing or refinancing your mortgage by providing expert guidance, competitive rates, and a hassle-free process tailored to your needs.
Whether you want to lower your payments, consolidate debt, or access home equity, we can help. We have VIP relationships with over 60+ banks, b lenders and private mortgage lenders including our own in-house private lender with $0 broker fee.
📲 Call us at 1-888-978-4984
📩 Email info@effortlessmortgage.ca
