All of Canada’s major banks, including RBC, TD, Scotiabank, CIBC, and BMO, have an early mortgage renewal option that allows you to renew 120 days (four months) before your term ends without any penalties. CIBC allows you to renew 150 days early (five months), while Scotiabank lets you renew 180 days early (six months).
There is no early mortgage renewal penalty if you renew within this period. Switching lenders or renewing before your mortgage lender’s renewal period may cause you to have to pay mortgage prepayment penalties.
|Bank||Early Renewal Period|
|RBC||Four Months (120 Days)|
|TD||Four Months (120 Days)|
|BMO||Four Months (120 Days)|
|CIBC||Five Months (150 Days)|
|Scotiabank||Six Months (180 Days)|
|National Bank||Six Months (180 Days)|
|Motusbank||Three Months (90 Days)|
|ATB Financial||Three Months (90 Days)|
|Vancity||Three Months (90 Days)|
|Desjardins||Four Months (120 Days)|
|B2B Bank||Four Months (120 Days)|
|Cambrian Credit Union||Four Months (120 Days)|
|Simplii Financial||Five Months (150 Days)|
|Meridian Credit Union||Six Months (180 Days)|
|ICICI Bank||Six Months (180 Days)|
|Canadian Western Bank||Six Months (180 Days)|
|Coast Capital Credit Union||7 Months (210 Days)|
Early mortgage renewals allow you to renew your mortgage well before your scheduled renewal date. This allows you to lock in a mortgage rate today, which can be helpful if you think rates will increase before your renewal date. The list of early mortgage renewal periods by major banks and lenders show some common early mortgage renewal periods.
However, your mortgage contract may specify a different length. You can renew your mortgage without any mortgage prepayment penalties during the early mortgage renewal period. If you renew before this period, you are considered to be breaking your mortgage, which will come with mortgage penalties.
When you renew your mortgage early, you will agree to a new mortgage rate that will apply for your next term. This new mortgage rate can apply in one of two ways, which will vary based on your lender. Some lenders will immediately apply your new mortgage rate to your mortgage. For example, if your renewal date is December but you renewed four months early in August, then your new mortgage rate will be used starting in September.
Other lenders will continue using your old mortgage rate until the new mortgage rate is effective when your mortgage is scheduled to be renewed in December. You can ask to have your mortgage renewal contract to be effective starting the first month after the contract was signed.
For example, Canadian Western Bank allows you to sign your mortgage renewal documents six months early, but the renewal itself will only take effect on the mortgage renewal date. Meanwhile, with National Bank, your new mortgage rate will be effective on the first payment after your mortgage renewal contract was signed.
There are two scenarios where an early mortgage renewal will save you money. The first is when mortgage rates are lower than your current mortgage rate. For example, let’s look at a 5-year $500,000 mortgage that is six months away from renewal that has a fixed mortgage rate of 3%.
Scotiabank allows you to renew your mortgage early by 180 days (six months), and currently offers a 5-year fixed mortgage rate of 2.50%. This is 0.50% lower than your mortgage rate. Since you can renew early without penalties, it can make sense to renew at the lower mortgage rate of 2.50% to take advantage of lower interest payments immediately.
In this case, renewing early to take advantage of a 0.50% lower mortgage rate for six months will save you $800.
The second scenario where you will save money is if mortgage rates increase in the future. Locking in a lower mortgage renewal rate can allow you to get a fixed rate before rates increase. A mortgage rate calculator can be used to find out how a difference in mortgage rates can affect your monthly mortgage payments.
You will not need to pay for CMHC mortgage insurance again if you renew your mortgage and your mortgage stays the same. If you have a high-ratio mortgage, such as if you made a down payment of less than 20%, you will have an insured mortgage. Mortgage default insurance premiums are charged upfront, which means that there are no annual premiums for CMHC, Genworth, or Sagen mortgage default insurance. However, do I have to pay CMHC fees again if I renew my mortgage?
You won't have to pay CMHC premiums twice if you are renewing your mortgage. If you switch lenders, your CMHC insurance will also be brought with you. This is because CMHC insurance is tied to your mortgage for the life of your mortgage, which is your mortgage’s amortization period. The most common amortization is 25 years, which means that you will have CMHC insurance on your mortgage for 25 years.
Your CMHC insurance will have a certificate number or an insurance certificate that you can provide to your new lender as proof that you already have mortgage loan insurance. However, if your mortgage changes, then you may need to pay for mortgage loan insurance again. This can happen if you refinance your mortgage by increasing your mortgage amount to borrow more money or extending your amortization period to reduce your monthly mortgage payments.
You may be eligible to receive a CMHC premium rebate if you need to pay for CMHC insurance again for a new mortgage. This might be because you are refinancing your mortgage, or if you have sold your home and are getting a new mortgage.
Refinancing your mortgage by increasing your mortgage amount will mean that you will be paying additional CMHC insurance premiums. As highlighted by the CMHC mortgage rules, you may receive a premium rebate depending on how much time has passed since your initial mortgage.
The premium rebate will decrease as more time has passed since your initial mortgage. If you've only had your mortgage for one year, you might be able to receive a premium rebate of 75% of the original CMHC premium, but you will need to pay CMHC premiums for your new refinanced mortgage amount.
If you have sold your home and are getting a new insured mortgage to pay for a new home purchase, CMHC portability allows you to port your existing CMHC insurance on your old mortgage to your new mortgage.
Suppose your new mortgage will be for less than your current mortgage. In that case, the loan-to-value (LTV) is less than or equal to your existing mortgage, and the amortization of the new mortgage is equal to or less than the amortization remaining on your current mortgage. You will not have to pay for CMHC insurance again.
If your new mortgage is higher, you will be charged either a premium on the additional money to be borrowed or a premium on the entire new mortgage amount.