Area of Law: Real Estate Law
Answer # 412
Mortgage renewalsRegion: Ontario Answer # 412
Mortgage renewal occurs at the end of each mortgage loan term, unless the mortgage has been paid in full. Depending on the type of mortgage loan you select, terms generally range from six months to five years. Renewing a mortgage loan can be done with your existing lender or elsewhere if you prefer the services and interest rate of another lender.
The interest rate is the main issue when you renew your mortgage loan so you may want to consider your options with other lenders to find the best arrangement. Although your existing lender may charge you a fee to switch your mortgage to another lender, you may be able to negotiate with your new lender for the fee to be covered. In any event, make sure you begin switching your mortgage loan at least 60 days before the expiry of your term to give yourself enough time to make the necessary arrangements.
Mortgage stress test – does not apply to renewals done with existing lenders
In January 2018, the Government of Canada’s Office of the Superintendent of Financial Institutions (OSFI) amended the mortgage rules introduced in 2016 that require Canadian home buyers to take a mortgage stress test to qualify for a mortgage at a bank.
The new stress test does not apply to mortgage renewals, as long as they are with the borrower’s existing lender. However, if you want to move your mortgage to a different lender, a stress test must be applied. For more information on the mortgage stress test, view What mortgage loan amount can you qualify for? Stress Test. More information about mortgages is available from Canada Mortgage and Housing Corporation.
If you are buying a home and want to know how much of a mortgage you qualify for, use the Scotiabank mortgage calculator .
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