Carefully preparing your mortgage renewal: a simple and concrete guide (Québec)

How to properly prepare for your mortgage renewal: a simple and concrete guide (Quebec)

Mortgage renewal is THE moment to take back control of your finances: reduce your payments, pay off debts, finance renovations… or, conversely, make a mistake that costs thousands of dollars over 5 years.

Here is a clear and practical guide for an audience aged 21 to 65, to help you prepare well.

1. Mortgage renewal vs refinancing: understand well

• Mortgage renewal
• You reach the end of your term (e.g., 5 years). You renegotiate your rate, your conditions and sometimes the remaining duration, but the amount of the mortgage remains substantially the same.
• You can stay with the same bank or transfer elsewhere without penalty (since the term is finished).
• Refinancing
• You replace your current mortgage with a new mortgage, often higher, to :
• add an amount for renovations;
• pay off debts at high interest rates (credit cards, lines of credit, personal loans);
• change the type of product (e.g., from variable to fixed).
• In Quebec, a notary must intervene to register the new mortgage and discharge the old one.

2. Before choosing: the elements to consider

a) Interest rate and rate type

• Fixed : stable payments, safe if your budget is tight.
• Variable : can be advantageous if you think rates will fall, but payments are more unstable.
• Look at :
• the rate;
• the remaining amortization period;
• the early repayment terms (important if you plan to move or refinance later).

b) Contract flexibility

To check before signing :

• Possibility to repay faster (annual lump-sum payments, increasing payment, etc.).
• Penalties in case of sale or refinancing before the end of the term.
• Possibility to add a mortgage line of credit for future projects.

c) Your personal situation

• Are you stable in your job?
• Do you plan to move in the coming years?
• Do you have high-interest debts?
• Do you have renovations or projects planned?

Your mortgage renewal/refinancing strategy should follow your life plan, not just the “lowest rate”.

3. Fees if you stay with the same bank vs if you change

If you stay with the same bank at renewal

• No notary fees for a simple renewal.
• Generally, no significant administrative fees.
• You renew the existing amount, with the same lender, new conditions.

Exception: if you increase the amount (refinancing with the same bank), then :

• Notary required;
• Possible property valuation fees;
• Administrative fees from the lender.

If you change banks at renewal

Good news:

• No termination penalty (the term is finished).
• But you usually have :
• Notary fees for :
• registering the new mortgage;
• discharging the old one.
• Possible valuation fees (some lenders pay them, others do not).
• Sometimes transfer / discharge fees (modest) related to the old bank.

Several new lenders offer:

• to pay part or all notary / transfer costs to attract you.
• But you must check if, in exchange, the rate isn’t a bit higher.

4. What documents should you submit?

For a simple renewal with the same bank, sometimes very few documents.

For a bank transfer or a refinancing, you generally need to provide:

1. Proof of income

• Recent pay stubs;
• Notice of assessment (T4/Statement 1 or tax notice) for employees;
• For self-employed: tax returns + notice of assessment (2 years), financial statements if applicable.

1. Information on the current mortgage

• Recent mortgage statement;
• Remaining balance, term, rate, payments.

1. Proofs of identity

• 2 valid pieces of ID.

1. Property-related documents

• Latest municipal/township tax bill;
• Deed of sale (if needed);
• Location certificate (sometimes required).

1. For a refinancing for debt or renovations

• List of debts to be repaid (credit card statements, lines of credit, loans);
• Bids for renovations or cost estimates (for some lenders).

5. Can I include an extra amount for renovations or to pay debts?

Yes, that is exactly what a mortgage refinance allows.

Generally in Quebec :

• You can borrow up to 80% of the market value of your property (value often determined by an appraisal).
• Simple example :
• House valued at $500,000
• 80% = $400,000
• Current mortgage balance = $300,000
• → You can potentially refinance up to $400,000, thus $100,000 available for renovations and/or debts (if you qualify in terms of income and credit).

Advantages of a debt refinance:

• Lower your interest rate (replacing 19.99% on credit cards with, for example, 5–6% on mortgage).
• Simplify your payments.

Warning :

• You convert short-term debts into long-term debt (amortized over 20–25 years).
• It is crucial to not reuse your cards afterward without a plan, otherwise you end up with the debts plus the higher mortgage.

6. Compare your bank’s offer vs the broker’s: how to know if it’s worth transferring?

A broker can often find a better rate or better terms. But transferring involves fees (especially notary). Therefore you need to calculate the profitability.

Steps to compare :

1. Note your current bank’s renewal offer

• Proposed rate;
• Term (e.g., 5-year fixed);
• Monthly payment;
• Flexibility (early repayments, etc.).

1. Note the broker’s offer (new bank)

• New rate;
• Term;
• Monthly payment.

1. Calculate the payment savings

• Difference between monthly payment Bank A vs Bank B.
• Multiply by 12 months, then by the number of years of the term (often 5 years) to get the potential savings.

1. Subtract all transfer fees

• Notary fees;
• Appraisal fees (if not paid by the lender);
• Other administrative fees.

1. Conclusion

• If the total savings over the term > transfer fees, the transfer is generally profitable.
• If the savings are marginal or equivalent to the fees, you may prefer:
• sticking with your bank (simplicity, relationship);
• or negotiating more aggressively with your current bank by showing them the competing offer.

7. Concrete tips and tricks for your mortgage renewal

1. Start 4 to 6 months before the due date

• This gives you time to shop around, talk to a broker, and negotiate.

1. Don’t rely only on your bank’s renewal letter

• It’s rarely their best rate. Call, negotiate, or work with a broker.

1. Shop around more than just the rate

• Look at: penalties, early repayment options, portability, flexibility.

1. Think about your near future

• Baby plans, returning to school, moving, buying a rental property…
• Depending on your project, a shorter term, a variable or a fixed term may be more logical.

1. Check if a light refinancing makes sense

• Take advantage of the renewal to :
• update your home (kitchen, bathroom, roof);
• group expensive debts;
• but always with a clear repayment plan.

1. Have penalties explained to you in black and white

• If you had to break your mortgage in 2–3 years, what would it cost you?

8. In summary

• Mortgage renewal is a golden opportunity to:
• optimize your rate,
• improve your flexibility,
• and, if necessary, consider a refinancing for renovations or debts.
• Changing banks can be very profitable, but you must include notary fees and other costs in the calculation.
• Prepare your documents in advance (income, mortgage information, debts, taxes, etc.).
• Always compare your bank’s offer vs broker’s offer, with figures to back it up, before deciding.

If you want, I can help you structure a small comparison table (current bank vs new bank) to easily visualize whether a transfer is really advantageous for you.