Early Renewals
Should You Act Before Your Term Ends?
Lock in a Better Rate Before It's Gone — or Reassess While You Still Can
If mortgage rates are on the move, timing can be everything. Whether rates are falling or climbing, you might be wondering: Should I renew early? Is it worth breaking my current mortgage to secure a better deal today?
At Better Mortgages, we guide you through the real math behind an early renewal—so you can make an informed decision that’s right for your goals, not just your current term.
What Does “Early Renewal” Actually Mean?
Renewing early means entering into a new mortgage contract before your existing term expires. Typically, homeowners begin thinking about renewal in the final 120 days of their mortgage term—that’s the standard renewal window with most lenders.
But if you’re looking to capture a better rate, make a structural change to your mortgage (like accessing equity or extending your amortization), or switch to a different lender entirely, you may want to take action well before that window opens.
Why Consider an Early Renewal?
Here are some common situations where breaking your mortgage early could make sense:
- Rates have dropped significantly, and you’re locked into a higher rate
- You’re concerned about future rate hikes and want to lock in now
- You’d like to refinance to access equity or consolidate debt
- You want to change lenders for better terms or service
In these scenarios, you’ll likely pay a penalty for ending your term early—but in many cases, the savings from securing a better rate can outweigh the cost of breaking the contract.
Early Renewal in a Rising Rate Market
If rates are expected to increase in the near future, locking into a new fixed-rate term today could shield you from higher borrowing costs down the road. Even if you pay a pre-payment penalty now, the long-term interest savings over the next 3 to 5 years could be
well worth the upfront expense.
This is especially true if your current mortgage is up for renewal in the next 12 to 18 months,
and your lender’s penalty structure is more forgiving.
Early Renewal in a Falling Rate Market
If rates have dropped significantly below what you’re currently paying, it might feel painful to keep shelling out higher interest. In this case, breaking early to secure a lower rate could improve your monthly cash flow and reduce your overall interest costs.
But timing matters. You’ll need to weigh the potential savings against:
The cost of your
early break penalty
Any legal or
administrative fees
The likelihood of rates
continuing to decline
This is where our expert team at Better Mortgages comes in. We’ll crunch the numbers with you and model different outcomes based on your exact contract, remaining term, and current market options.
What Could It Cost to Break Early?
If you’re in a closed-term mortgage (which most Canadian homeowners are), breaking the term before maturity usually involves one of the following:
3 months’ interest penalty (common for variable-rate mortgages)
Interest Rate Differential (IRD) (applies to fixed-rate mortgages and can vary widely between lenders)
Discharge or administrative fees
Potential reinvestment fees depending on your lender
With open-term mortgages, you have more freedom to make changes without penalties—but these typically come with higher interest rates from the outset.
Pro Tip: Lender penalty calculations can vary significantly. That’s why a seemingly small rate change could result in wildly different break costs depending on your mortgage provider.
How to Read the Market Like a Pro
Want to know when to make a move? Here are some quick signals:
- Variable-rate borrowers: Your rate will track the Bank of Canada’s policy decisions. If a hike is expected, you may want to lock in sooner rather than later.
- Fixed-rate borrowers: Watch bond yields. Rising yields typically mean rising fixed rates.
- Rate spreads: If variable rates are significantly lower than fixed, some clients consider early renewal into a variable rate to maximize short-term savings—especially if they anticipate refinancing or selling within a few years.
We keep a close eye on these indicators so you don’t have to. When you work with Better Mortgages, you’re never flying blind.
A Strategic Move, Not a Guessing Game
Early renewals can be a powerful financial strategy—but only if the numbers add up. With Better Mortgages, you get access to professionals who can:
- Analyze your current mortgage terms
- Estimate your exact pre-payment penalties
- Compare market rates and lender offers
- Present side-by-side cost-benefit scenarios
- Handle the paperwork if you decide to move forward
We don’t push you to renew early unless it makes real financial sense.
Let’s find out if renewing early, is better
Ready to Run the Numbers?
Every situation is different—and timing is everything. If you’re curious about whether an early renewal could help you save, we’ll take a look at the full picture and provide clear, no-obligation advice.
Reach out today to chat with a mortgage expert, get a penalty and savings estimate, and explore current renewal offers.
At Better Mortgages, we make early renewal decisions simple, smart, and stress-free.