Mortgage renewal in Ajax: compare before you sign.

At maturity you can usually switch lenders without a prepayment penalty, because your term has ended. Switching can still involve costs such as legal and discharge fees, and your new lender may require you to qualify again. We compare the potential savings with those costs before recommending a switch.

Many lenders let you start up to 120 days before your maturity date and hold a rate for up to 120 days. Starting early gives you time to compare options and make a calm decision.

Lenders typically ask for proof of income, an employment letter or recent pay stubs, your property tax statement, your current mortgage statement and government-issued ID. Self-employed borrowers may be asked for additional income documents. Your broker confirms what applies to your file.

If you renew with your current lender, you usually do not need to re-qualify. If you switch to a new federally regulated lender and keep the same balance and remaining amortization, with no equity taken out, many switches no longer need to pass the stress test. If you borrow more or extend your amortization, you will generally need to qualify at the higher of your contract rate plus 2 percentage points or 5.25%. Conditions apply, and credit unions and other lenders have their own rules.

A fixed rate stays the same for the term, which makes payments predictable. A variable rate moves with the lender's prime rate. Which suits you depends on your income stability, your balance and how much change you can absorb. Many variable mortgages carry three months' interest to break, while fixed mortgages can carry the greater of three months' interest or an interest rate differential.

Renewal resets your rate and term on the same balance. A refinance changes the mortgage, for example to borrow against your equity or consolidate debt, and may carry a prepayment charge if you do it before maturity. At maturity you can usually refinance without a prepayment penalty.

Switching at maturity usually avoids a prepayment penalty, but legal and discharge fees can apply and are shown against any potential savings before you decide. Any fee that applies to your file is disclosed in writing before you commit.

lendsimpl is licensed and regulated by FSRA (Brokerage #13763), required to disclose fully and act in your interest. We serve Ajax and communities across Ontario.