Mortgage Renewal: Why Locking in Early Could be Right for You

Approximately 1.2 million mortgages are renewing at a higher rate than the ultra-low levels seen during the pandemic. If you’re among these homeowners, consider locking in your mortgage rate early to give you more control over your finances in today’s changing economic environment.

Take advantage of the early renewal option at RBC which allows you to renew up to 180 days before your mortgage maturity date, without penalty. There are many other benefits.

Rate Lock: Protect Yourself in Uncertain Times

Today’s economic environment is aptly and consistently described as uncertain. Forecasting what comes next is challenging, given disruption in trade, sticky inflation and geopolitical tensions. This makes future interest rate movement difficult to predict, but one thing experts seem to agree on is this: Canada is not likely  to see rates like those of 2020-2021 anytime soon.

It’s worth noting too, that even if rates do fall, it doesn’t mean that fixed mortgage rates will also go down. This is because fixed mortgage rates don’t always mirror Bank of Canada changes – rather, they are influenced by bond yields and lender expectations.

By locking in your mortgage renewal early, you can gain peace of mind from knowing what your mortgage payments will be in the future.  The renewal process is easy and convenient too – you don’t have to requalify for your mortgage and your lender won’t do a credit check. Once you’ve decided on your new mortgage type and term, it’s simply a matter of signing some paperwork.

Get a quick estimate of what your new mortgage payments may be at renewal using the RBC Mortgage Payment Calculator. 

Review Your Mortgage Options Before Your Renew

Advance planning can pay off in other ways too. Reviewing your mortgage renewal options early gives you the chance to reassess your goals and make financial decisions that reflect your current needs and priorities. After all, life may look different than it did when you got your mortgage — and your priorities may have shifted too. That’s why now is the perfect time to explore your options and make any necessary adjustments.

Here are a few things to consider:

• Mortgage Refinancing: If you have non-mortgage debt, refinancing your mortgage at the time of renewal can let you consolidate that debt, helping to lower your borrowing costs and simplify repayments

• Extend Your Amortization: You may be eligible to extend your amortization, which can help relieve any cash flow pressure you may be experiencing

• Pay-off Your Mortgage Faster:  If rates go down and you have room in your budget, this might be an opportunity to pay down your mortgage faster, such as by accelerating your mortgage payments

• Talk to a Mortgage Advisor: Mid-term changes to your mortgage often come with fees – so if your financial situation has changed due to family, career or income shifts, now is the time to make adjustments. Be sure to seek meaningful advice from a mortgage professional who can recommend solutions that meet your needs.

Get Guidance for Long-Term Financial Security

Many Canadians are feeling the strain of changing economic conditions. Taking some time to talk through your mortgage renewal options now can help you make informed choices, rather than feeling rushed when your term comes to an end.

It’s also a good opportunity to step back and look at your full financial picture, including your investments, loans and other financial responsibilities. A financial advisor can help you determine your next steps and provide guidance that goes beyond your mortgage, supporting your long-term financial security.

Looking for more information on Bank of Canada’s latest interest rate? View more.