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The 90-Day Renewal Advantage | Your Mortgage Minute · Your Mortgage Minute | Onlendhub

• 0:15
  SPEAKER_01: Welcome to another episode of your mortgage minute by on lendhub.ca.
• 0:19
  SPEAKER_01: I'm Sarah, and with me is our mortgage expert Mooley.
• 0:23
  SPEAKER_01: Today we're tackling a question thousands of Canadians are asking right now.
• 0:28
  SPEAKER_01: Should I renew my mortgage early or wait until my maturity date?
• 0:32
  SPEAKER_01: Mooley, we're seeing a lot of renewal letters hitting mailboxes.
• 0:36
  SPEAKER_01: What's the real advantage of acting 90 days ahead?
• 0:40
  SPEAKER_00: Great question, Sarah.
• 0:41
  SPEAKER_00: The 90-day window, or even better, 120 days, is when you have maximum leverage.
• 0:46
  SPEAKER_00: Here's why.
• 0:47
  SPEAKER_00: When you're within that prematurity period, lenders compete for your business before you're locked into their default renewal rate.
• 0:54
  SPEAKER_00: Once you hit day zero, you're on their terms.
• 0:56
  SPEAKER_00: Let me give you a concrete example.
• 0:58
  SPEAKER_00: Say you have a$500,000 mortgage coming up for renewal.
• 1:01
  SPEAKER_00: Your bank's posted renewal rate might be 6.2%.
• 1:04
  SPEAKER_00: But if you start shopping at day minus 120, you could secure an insured rate around 4.09% through a broker.
• 1:11
  SPEAKER_00: That's a 2.11% difference on$500,000 over five years.
• 1:15
  SPEAKER_00: That's roughly$52,750 in interest savings.
• 1:19
  SPEAKER_01: That's a massive difference.
• 1:21
  SPEAKER_01: But I'm hearing from listeners who say, My bank offered me a great rate already.
• 1:26
  SPEAKER_01: How do they know if it's actually competitive?
• 1:29
  SPEAKER_00: They don't unless they compare.
• 1:31
  SPEAKER_00: And here's the framework I use.
• 1:33
  SPEAKER_00: First, get your renewal letter and note the rate and term.
• 1:36
  SPEAKER_00: Second, call at least two other major banks and ask for their best five-year fixed rate for a switch.
• 1:42
  SPEAKER_00: Third, talk to a mortgage broker who has access to monoline lenders and insured rates.
• 1:48
  SPEAKER_00: You're looking for three data points.
• 1:50
  SPEAKER_00: Let's say bank A offers 5.89%, bank B offers 5.64%, and a broker quotes 4.09% insured.
• 2:01
  SPEAKER_00: That spread, 1.8%, on a$500,000 mortgage is about$45,000 over five years.
• 2:09
  SPEAKER_00: That's the cost of not shopping.
• 2:11
  SPEAKER_01: So the timing piece is critical.
• 2:13
  SPEAKER_01: What happens if someone waits until the last minute, say 30 days before maturity?
• 2:18
  SPEAKER_00: You lose optionality.
• 2:20
  SPEAKER_00: At 30 days out, some lenders won't even quote you because they can't guarantee closing before your current term expires.
• 2:26
  SPEAKER_00: You're also under time pressure, which means you're less likely to negotiate or walk away.
• 2:31
  SPEAKER_00: And here's a red flag.
• 2:32
  SPEAKER_00: If your current lender knows you're desperate, they have zero incentive to improve their offer.
• 2:36
  SPEAKER_00: I've seen borrowers wait until week two of their renewal month, panic, and sign a rate that's 50 to 75 basis points higher than what was available 60 days earlier.
• 2:45
  SPEAKER_00: On$500,000, that's an extra$6,250 to$9,375 over five years, just for waiting.
• 2:52
  SPEAKER_01: Let's talk about the market conditions right now.
• 2:55
  SPEAKER_01: The Bank of Canada just held at 2.25% for the sixth time, but bond yields are rising.
• 3:01
  SPEAKER_01: Should that influence the timing decision?
• 3:04
  SPEAKER_00: Absolutely.
• 3:05
  SPEAKER_00: Fixed mortgage rates don't follow the Bank of Canada, they follow bond yields.
• 3:10
  SPEAKER_00: The five-year government of Canada bond is around 3.2% right now and it's been climbing.
• 3:16
  SPEAKER_00: That means fixed rates are under upward pressure.
• 3:18
  SPEAKER_00: Variable rates, on the other hand, track the overnight rate, so they're stable at prime minus discounts, around 3.4 to 3.9%, depending on the lender.
• 3:28
  SPEAKER_00: If you're leaning fixed, locking in early makes sense because you're betting against rising bond yields.
• 3:34
  SPEAKER_00: If you're considering variable, you have more flexibility because the Bank of Canada is on hold.
• 3:40
  SPEAKER_00: But here's the key don't wait for the perfect moment.
• 3:43
  SPEAKER_00: The cost of waiting, even a few basis points, adds up fast.
• 3:48
  SPEAKER_01: Can you walk us through a real scenario?
• 3:50
  SPEAKER_01: Let's say someone in Toronto with a$600,000 mortgage, currently at 2.1%, renewing in October 2026.
• 3:59
  SPEAKER_01: What should they do?
• 4:01
  SPEAKER_00: Sure.
• 4:02
  SPEAKER_00: First they should start shopping in July.
• 4:04
  SPEAKER_00: That's 90 days out.
• 4:06
  SPEAKER_00: Their current bank might offer 5.99% on renewal, but if they act early, they could get 4.09% insured or 4.64% uninsured with a major lender.
• 4:18
  SPEAKER_00: Let's calculate the difference.
• 4:20
  SPEAKER_00: At 5.99%, their monthly payment on a 25-year amortization is about$3,850.
• 4:28
  SPEAKER_00: At 4.09%, it's$3,150.
• 4:33
  SPEAKER_00: That's$700 per month or$8,400 per year.
• 4:37
  SPEAKER_00: Over five years, that's$42,000.
• 4:40
  SPEAKER_00: Even if bond yields drop and they could refinance later, they've already locked in savings.
• 4:45
  SPEAKER_01: What about someone who's thinking, I'll just wait and see if rates come down?
• 4:49
  SPEAKER_01: What's the risk there?
• 4:51
  SPEAKER_00: The risk is twofold.
• 4:53
  SPEAKER_00: First, bond yields could keep rising, and they have been.
• 4:56
  SPEAKER_00: If the five-year bond moves from 3.2 to 3.5%, fixed rates could jump another 25 to 50 basis points.
• 5:04
  SPEAKER_00: Second, even if rates drop slightly, you're gambling with your largest monthly expense.
• 5:10
  SPEAKER_00: The smarter move is to lock in a competitive rate now, and if rates do drop significantly within the first year, most lenders allow you to break the mortgage with a three-month interest penalty.
• 5:21
  SPEAKER_00: On$600,000 at 4.09%, that penalty is about$6,135.
• 5:29
  SPEAKER_00: But if rates drop by one full percent, you'd save roughly$12,000 per year.
• 5:34
  SPEAKER_00: So the math still favors acting early and refinancing later if needed.
• 5:39
  SPEAKER_01: Let's wrap with actionable steps.
• 5:42
  SPEAKER_01: What should listeners do this week if their mortgage is renewing in the next six months?
• 5:47
  SPEAKER_00: Three steps.
• 5:48
  SPEAKER_00: One, pull your renewal letter and note the maturity date.
• 5:52
  SPEAKER_00: Two, if you're within 120 days of that date, start calling lenders and brokers today.
• 5:58
  SPEAKER_00: Three, get at least three written quotes.
• 6:01
  SPEAKER_00: Don't rely on verbal estimates.
• 6:03
  SPEAKER_00: And here's the decision framework.
• 6:05
  SPEAKER_00: If the spread between your best quote and your bank's offer is more than 50 basis points, switch.
• 6:10
  SPEAKER_00: If it's less than 25 basis points, staying might make sense for convenience.
• 6:14
  SPEAKER_00: But anything in between, shop harder.
• 6:17
  SPEAKER_01: Perfect.
• 6:17
  SPEAKER_01: So to recap, start shopping 90 to 120 days early, compare at least three quotes, and don't wait for the perfect rate.
• 6:28
  SPEAKER_01: Thanks, Mooley.
• 6:29
  SPEAKER_01: And thanks for listening to Your Mortgage Minute by OnlandHub.ca.