Renewing or refinancing, before you sign anything
A renewal letter is easy to sign without reading it. A few weeks of comparing first shows you what else is on offer, and what it would cost to move.
When to start a renewal
Many lenders will hold a rate up to about 120 days before your term ends, and the renewal letter often arrives only a few weeks before the date. Starting early gives you time to compare without a deadline in your face.
- About four months before
- Call us. We look at your current mortgage and what you want next: a shorter or longer term, a different rate type, room for extra payments.
- About three months before
- We collect offers from other lenders and hold a rate if one looks better than what your lender is likely to offer.
- When the letter arrives
- We read your lender's renewal offer with you, line by line, and set it next to the others.
- Before the renewal date
- You sign with your lender, or switch to a new one. Switching takes a few weeks, which is why we start it early.
Staying or switching lenders
Neither is right for everyone. This is how the two usually compare at renewal time.
| Topic | Staying with your lender | Switching to another lender |
|---|---|---|
| Paperwork | Usually just signing the renewal offer. | A new application, income documents and sometimes an appraisal. |
| Costs | None in most cases. | Often little or none at renewal, as some lenders cover the legal and discharge fees. We check before you decide. |
| Rate and terms | Whatever your lender offers, sometimes more if you ask. | Offers from several lenders, side by side. |
| Timing | Can be done in the last few weeks. | Needs a few weeks, so it starts earlier. |
Refinancing for a renovation or to combine debts
Refinancing replaces your mortgage with a larger one and pays you the difference. You can usually borrow up to 80% of your home's value, minus what you still owe on it.
For a renovation
A new kitchen, a basement suite, a roof. We look at whether a refinance, a line of credit or waiting for your renewal suits the amount and the timing better.
To combine debts
Rolling a car loan or credit cards into the mortgage can lower the monthly total, but it stretches that debt over many more years. We set out the total cost both ways so you can see the trade-off before you choose.
What a prepayment penalty is
If you break your mortgage before the term ends, by switching lenders, refinancing or selling, the lender charges a fee for the interest it loses. That fee is the prepayment penalty.
Variable rate
Usually three months' interest on what you still owe.
Fixed rate
Usually the higher of three months' interest or the interest rate differential (IRD), which compares your rate with the lender's current rate for the time you have left.
Lenders work out the IRD in different ways, so ask yours for the exact figure in writing. We will go through it with you before you decide anything.
Renewal letter on the counter?
Send a call request with a few weeks to spare and we will read it with you.