Ghummaz Bhatti

Ghummaz Bhatti

What You Should Remember If Your Mortgage Renews in 2023

Mortgage interest rates are crucial in the decision-making process of homebuyers. They’re central to a home’s affordability and will determine how much you’ll pay over the loan’s life. 

However, being a responsible borrower means going beyond that. You should also know when to renew your mortgage and how to handle the higher interest rate. While it may be valid to feel stressed, you should understand the renewal process, work with mortgage services, and prepare for the trend to ensure the transition runs smoothly. 

If you want to make more informed decisions, this article will enumerate five things to remember if your mortgage renews in 2023.

1. You Can’t Requalify Unless You Change Lenders

Before your mortgage term expires, your lender should send you a renewal statement with a new offer, including a new interest rate, payment frequency, duration, and applicable charges or fees. 

You must always compare your current lender’s renewal offer with other mortgage services to determine if you can get a better deal and save money. If you accept your current lenders’ renewal terms, you don’t need to requalify, and it may be your best option if you’re struggling financially. 

However, if you switch lenders, you should requalify as a borrower, including passing the mortgage stress test when interests are high. 

2. You Can Hit Your Trigger Rate before Your Renewal

If you have a mortgage with a fixed payment amount, the monthly payment won’t change even if the interest rates rise. However, if you pay less towards the principal loan and more interest, the amount you owe will eventually increase because of the higher interest rate. This situation can be problematic in the long run. 

If interest rates, your lender may contact you with three options: increase payments, make a prepayment, or switch to a fixed-rate mortgage. Regardless of your choice, carefully read through your mortgage agreement and consult your mortgage service if you have questions.

3. Shopping Around Is Worth Trying

If you have a steady income and manageable debt payments, you shouldn’t just accept the mortgage renewal offer from your current lender. Instead, take some time to research, compare the rates from different lenders, and negotiate a better deal with your current lender. 

However, if you’re switching lenders, you should know about potential additional fees like setup costs, discharge or transfer fees, appraisal fees, and removal of collateral charges. Ask the new lender if they’ll cover these expenses to win your business.

4. Choosing a Shorter Term Can Be Beneficial

It may be best to consider shortening your mortgage’s duration. When you go with a fixed-rate loan of one to three years, it will protect you from potential rate hikes. You can also take advantage of them quickly without renegotiations or breaking your contract when rates go down.

On the other hand, variable-rate mortgages have an interest that can change over time, regardless of your chosen term’s length. You may get a more significant discount on the interest rate when you renew if you choose a shorter period. However, you could experience more frequent increases in interest rates before the Bank of Canada changes the key lending rate. 

5. Higher Interests Rate Can Significantly Affect Payments

The Bank of Canada increased its overnight rate six times since March, currently at 3.75%. This trend caused mortgage rates to rise from two to six percent. 

If you had a $500,000 mortgage with a two percent interest rate on a 25-year amortization schedule, your monthly payments would’ve increased to $3,200, or an extra $12,240 yearly.


Mortgage renewals can be stressful, especially for first-time homeowners. Fortunately, you can make the process easier by negotiating, comparing different offers, and seeking help from professional mortgage services. 

If you need mortgage services in Ottawa, let Ottawa Mortgage Services help. We provide mortgage agent services for first-time buyers, self-employed individuals, and commercial clients. Contact us now!

Contact Ottawa Mortgage Services to learn more

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