Early Mortgage Renewals: Pros, Cons, and Expert Advice

By: Edi Marinescu

Disclaimer: The following article is for informational purposes only and does not constitute financial advice. Consult with one of our professional mortgage brokers for personalized guidance.

If you are a homeowner and your mortgage is approaching renewal, it is crucial to carefully consider your options. Early mortgage renewals can offer advantages and disadvantages that may influence their decision-making process. In this article, we explore the pros and cons and provide expert advice to help homeowners make informed choices.

Understanding the Early Mortgage Renewal

This type of renewal involves renewing a mortgage before the current term expires. Generally, mortgage terms range from 1 to 5 years (although 7- and 10-year terms are available, we do not recommend them). This option allows homeowners to reassess their financial situation, explore new opportunities, and potentially take advantage of better mortgage terms.

Benefits of Early Mortgage Renewals

  1. Potential Savings on Monthly Payments
    Early mortgage renewals can lead to potential savings on monthly mortgage payments. By renewing at a time when interest rates are lower than the initial term, homeowners can secure a new mortgage with a reduced interest rate. This decrease in interest rate can translate into substantial savings over the course of the mortgage term, especially if you do not let your mortgage renew automatically.
  2. Flexibility in Mortgage Terms
    Renewing a mortgage early provides homeowners with the opportunity to adjust their mortgage terms. This flexibility allows for customization according to the homeowner’s changing financial needs. Homeowners can modify the length of the mortgage term, choose between fixed or variable interest rates, or even switch lenders to find the most favorable terms.
  3. Opportunity for Debt Consolidation
    Early mortgage renewals can also present an opportunity for debt consolidation. Homeowners who have accumulated high-interest debt can leverage their mortgage renewal to consolidate their debts into a single, more manageable payment. This approach can potentially save money on interest payments and simplify financial management.

Disadvantages of Early Mortgage Renewals

  1. Prepayment Penalties
    One significant disadvantage of early mortgage renewals is the potential for prepayment penalties. Lenders may charge penalties if homeowners pay off their mortgage before the end of the term. It is crucial to review the terms and conditions of the existing mortgage agreement to understand the potential financial implications of an early renewal.
  2. Administrative Costs
    Homeowners considering early mortgage renewals should be aware of the associated administrative costs. These costs may include legal fees, appraisal fees, and other administrative expenses. It is important to factor in these additional expenses when evaluating the potential benefits of an early renewal.
  3. Consideration of Higher Interest Rates
    When contemplating early mortgage renewals, it is essential to consider current market conditions, especially if interest rates are higher than expected. Higher interest rates can impact the overall cost of the mortgage and potentially reduce the financial benefits of early renewal. Homeowners should consult with mortgage brokers to assess whether the timing is favorable for an early renewal.
  4. Is Early Mortgage Renewal Right for You?
    Determining whether an early mortgage renewal is suitable for you requires careful evaluation of your financial situation and long-term goals. Consider the following factors before making a decision:

    • Assessing Your Financial Situation
      Evaluate your current financial position, including income, expenses, and debt obligations. Assess whether you can comfortably handle the new mortgage terms and monthly payments associated with an early renewal. Take into account any potential changes to your income or expenses in the foreseeable future.
    • Evaluating Market Conditions
      Stay informed about current mortgage rates and economic conditions. Evaluate whether the current interest rates align with your financial goals. Consider consulting with our mortgage brokers to analyze market trends and make an informed decision.
    • Considering Long-Term Goals
      Consider your long-term financial goals and plans. Evaluate whether an early mortgage renewal aligns with your objectives. Determine if it can contribute positively to your financial future and help you achieve your long-term goals.

Expert Tips for Successful Early Mortgage Renewals

  1. Work with a Knowledgeable Mortgage Broker
    Collaborate with a knowledgeable and experienced mortgage broker who can guide you through the process. A mortgage broker has access to multiple lenders and can help you compare offers, negotiate terms, and find the best solution for your unique needs.
  2. Review Your Existing Mortgage Agreement
    Thoroughly review the terms and conditions of your existing mortgage agreement. Understand the provisions related to early renewals, prepayment penalties, or any potential fees. This will help you comprehend the financial implications and make an informed decision.
  3. Crunch the Numbers
    Perform a detailed financial analysis to understand the potential savings, costs, and overall impact of an early mortgage renewal. Consider the interest savings, prepayment penalties, administrative costs, and any other financial factors relevant to your situation.
  4. Negotiate Favorable Terms
    During the early renewal process, don’t hesitate to negotiate the new mortgage with other lenders or have your mortgage broker do it on your behalf. Use the information gathered from comparing offers to your advantage. Negotiating for favorable terms that align with your financial goals and maximize your savings is key, whether you do it alone or through a mortgage broker.


Early mortgage renewals offer homeowners the opportunity to reassess their financial situation, potentially save on monthly payments, and customize their mortgage terms. However, it’s important to consider the potential disadvantages, such as prepayment penalties, administrative costs, and the impact of higher interest rates. Assess your financial situation, evaluate market conditions, and consult with mortgage brokers to make an informed decision. By following expert tips and guidance, you can navigate the early mortgage renewal process successfully and secure favorable terms that align with your goals.


Can I renew my mortgage early if interest rates are higher than before?

Yes, you can renew your mortgage early even if interest rates have increased. However, it’s crucial to assess the overall cost and financial implications before making a decision. Consult with a mortgage broker to understand the potential impact of higher interest rates on your mortgage.

Will I incur any fees or penalties for early mortgage renewal?

There may be prepayment penalties and administrative costs associated with early mortgage renewals. It is essential to review your existing mortgage agreement and discuss potential fees with your lender or mortgage broker.

How can early mortgage renewal help with debt consolidation?

Early mortgage renewal provides an opportunity to consolidate high-interest debts into your mortgage, potentially reducing the overall interest payments. This can simplify your finances by consolidating multiple debts into a single monthly payment.

What if my financial situation changes after an early mortgage renewal?

If your financial situation changes significantly after an early mortgage renewal, it is advisable to communicate with your lender. They may be able to offer solutions or modify the terms to accommodate your new circumstances.

How can I find the best early mortgage renewal option?

Working with a knowledgeable mortgage broker is highly recommended. They can help you compare offers from different lenders, negotiate favorable terms, and guide you through the early renewal process to find the best option for your specific needs.

Contact us today and we would be glad to find you options for your investment plan.



Lowest Residential Mortgage Rates in Canada*

Term OUR RATE TD Bank Rate
3 Year Fixed/ 25 yrs 4.99%Promo 5.51%
4 Year Fixed/25 yrs 5.04% Promo 5.52%
5 Year Fixed/ 25 yrs 4.84% Promo 5.14%
5 Year Variable/ 25 yrs 5.95% Promo 6.19%
5 Year Fixed/ 30 yrs 4.99% Promo 5.62%
5 Year Variable/30 yr 6.24% 6.34%
3 Year Fixed/30yr 5.19% Promo 5.81%
**NEW RENTAL 5 Year Fixed /30yr 5.09% Promo 5.77%

Updated: June12 , 2024

* Current promotion rates may provide an additional 0.05% discount or may be anytime discontinued at the Lender discretion.Some condition may apply.Rates may vary between geographic regions and the posted rates on this website may not be available in your area.TD Bank rate used for comparable are the rate listed in the Broker Chanel Portal by TD Canada Bank at the date above. Please contact our MCI office for more details and current promotions.

LOWEST REGULAR RATES IN CANADA*   * Current promotion rates may provide an additional 0.10% discount. Rates may vary between geographic regions and the posted rates on this website may not be available in your area. Please contact our MCI office for more details and current promotions.

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