Renewal · 6 min read
Five Mortgage Renewal Mistakes That Cost Atlantic Canadians Thousands
Mortgage renewal is the single biggest moment of financial leverage most homeowners get every five years — and it's the moment most people throw away by signing whatever letter their bank mails them. Here are the five mistakes I see over and over in Nova Scotia and New Brunswick, and what to do instead.
Mistake 1: Auto-signing the bank's first offer
Banks know that 70% of renewals are signed without comparison shopping. So the rate they offer existing customers is rarely their best rate — it's the rate that maximizes their margin on the inertia of loyal customers. The exact same bank, asked through a broker for a new-money quote, will routinely come in 20–50 basis points lower. On a $400,000 mortgage at renewal, that's $4,000–$10,000 over a 5-year term, for the price of a 15-minute phone call.
Mistake 2: Waiting until the last week
You can lock a renewal rate 90 to 120 days before maturity, with no penalty if rates drop further in the meantime — most lenders will float you down. Waiting until your renewal letter arrives 30 days out gives you no leverage and no time to switch lenders if the offer is uncompetitive. Set a calendar reminder for the 120-day mark and start the conversation then.
Mistake 3: Ignoring collateral charges
Many banks, especially TD and the credit unions, register mortgages as 'collateral charges' rather than standard charges. The catch is that collateral charges can't be transferred to a new lender at renewal without re-doing all the legal work — usually $800–$1,200 in fees. If your current mortgage is a collateral charge, factor that switch cost into any comparison; sometimes the right move is to stay put and just negotiate hard with the existing lender.
Mistake 4: Picking the wrong term out of habit
Most people renew into another 5-year fixed because that's what they did last time. But the right term depends on your life: planning to sell within three years? A 3-year fixed avoids a giant IRD penalty. Worried about rate volatility but want some flexibility? A variable with a 5-year term is fully prepayable. Locked into a 5-year fixed during a high-rate cycle that's clearly easing? You may be giving up real money. The term decision should be a five-minute conversation, not a default.
Mistake 5: Rolling new debt into a renewal switch
If you're switching lenders at renewal, the cheapest option is a straight 'switch and transfer' — no appraisal, minimal legal cost, the new lender often pays the fees. The moment you add new money for debt consolidation or a renovation, you trigger a full refinance: appraisal, full legal, the works, typically $1,500–$2,500 in extra cost. Sometimes that cost is worth it, but it should be a deliberate decision, not something that surprises you at the lawyer's office.
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