Mortgage Renewal Options

Tracy Head • September 9, 2023

Right now I am fielding a high number of calls from people looking for information about renewal options.


In 2016 when the Stress Test was introduced I remember questioning the wisdom of the new qualification guidelines. I also remember qualifying clients based on a rate of 4.64 per cent when their mortgage rate was only 2.24 per cent (that was the Bank of Canada Benchmark rate at the time) and feeling a bit frustrated that their borrowing power had been reduced.


Clients had to look for ways to strengthen their applications. Over the last few years with prices and rates increasing this has meant clients have been leaning on family for help with their down payment or adding them to their applications as co-signors.

By 2018 the Bank of Canda Benchmark rate we were using to qualify clients had risen to 5.25%. Fast forward to 2023 and those mortgages are now coming up for renewal and clients are looking at renewal rates around 6 per cent.


In theory the Stress Test was bang on and clients were qualified to actually make the payments based on the renewal rates they are facing today (plus or minus a half per cent). In theory clients should be able to carry their new higher payments based on today’s interest rates. In theory clients’ income would have risen over the last five years. Reality looks a bit different.


The cost of living has skyrocketed. I’m sure we all feel it every time we see our bill at the grocery store or the fuel pump.

I don’t have official statistics but am seeing many clients carrying more consumer debt when I review their updated applications. It is not unusual to see people trying to manage a credit line, multiple credit cards, and even one or two vehicle payments. What this increased consumer debt means for a few clients that I’ve worked with is that they either need to stay with their current lender and accept the renewal rate offered, or they need to consolidate their consumer debt into their mortgage in order to afford to stay in their homes.


The significant increase in house prices over the last five years means that refinancing at renewal is an option. Sometimes, arguably many times, this is the right decision in order for clients to reset their finances. Sometimes harder decisions need to be made.

Is this the right decision long term? One of the other options is selling their homes to get out from under the consumer debt but the challenge with this decision is that suitable rentals are hard to come by and in many cases the monthly rent payment is higher than what a mortgage payment would be.


The sticker shock of renewal rates and payments has been sobering this fall. If you have a mortgage coming up for renewal over the next few months I encourage you to connect with your lender or mortgage person at least four months ahead of time to look at what your options are.

Tracy Head

Mortgage Broker

GET STARTED

Home Inspection

By Tracy Head • March 28, 2025
In an ideal situation I have some time upfront to work with clients on their pre-approval. I like to go over what to expect in terms of both the process and what to expect in terms of closing costs when they have an accepted offer on a home. We usually talk about potential expenses like property transfer tax, an appraisal, a home inspection, home insurance, and legal fees. This time of year we also talk about upcoming property taxes for anything they are purchasing before July 1st. I think human nature is that we want to minimize our expenses and make sure we are getting the most bang for our buck. There are a few areas of cross-over where I anticipate the clients’ realtor will be speaking to them about items like the requirement to organize home insurance and the importance of a home inspection. In practice I think most realtors encourage their buyers to move forward with a home inspection because they want to ensure clients are not buying any surprises that will create headaches down the road. Sometimes clients are buying privately and are not represented. In those cases I always urge them to include a home inspection as one of their conditions. I have had clients question the need for a home inspection, particularly if they are buying a condo or a new build. Two recent examples have popped up that reinforce for me the importance of a home inspection: - We are working with a lovely first-time home buyer in the lower mainland. Her budget isn’t huge so she has been waiting and watching for the right property to come up, and for her offer to be the one chosen. The stars aligned for her last week. Her financing was approved and all of the financing conditions were signed off by the lender. We were doing a happy dance for her and had a rude awakening the day she did her home inspection. The home inspector found an ongoing leak in the kitchen that has created a soft wall which is indicative of a bigger problem. On a surface level the kitchen is beautiful and relatively recently updated. As a first-time home buyer with no family nearby our client was thrilled by the aesthetics of this condo, then devastated by the potentially expensive work needed to repair / rectify the damage. - The second situation really caught us by surprise. We have clients on Vancouver Island who have an accepted offer on a brand-new home that has never been lived in. They did choose to invest in a home inspection and we are so glad they did. It turns out that somehow some of the larger windows were installed incorrectly and this has created damage to the windows and a leak in one corner. Again, with a new build the temptation would often be to skip the home inspection. Yes, any issues with this home will be covered by warranty. Having the home inspection done and being aware of the issues upfront gives them a lot more power with respect to having these defects repaired quickly. Now that I’ve driven that point home, its important to know that not all home inspectors are created equal. Do your due diligence – look at reviews, look at the home inspector’s qualifications and length of time / experience doing home inspections. Going with the cheapest option is not always the best option.  Buying a home is the biggest investment you will likely make. Trying to save a few hundred dollars upfront may end up costing you thousands of dollars and sleepless nights down the road. Save yourself the pain and aggravation of hidden issues in your home.

Rate Wars

By Tracy Head • March 24, 2025
Annnnnnnd …. Its on!  Spring has arrived and with it comes a significant drop in mortgage interest rates. Over the last few months when I’ve chatted with clients who are renewing or planning to buy in the spring market I have said in almost every conversation that by mid-March rate wars tend to start. Regardless of what is happening in the interest rate environment as a whole it seems by the third week of March lenders start sharpening their pencils. Over the last two weeks we started to see lender bulletins trickle in advertising quick- close rate specials (ie: for mortgages finalizing within 60 days) and rate drops across the board. Today I have had updates from six different lenders and its only noon. Why is this important to you? Not all lenders have the same policies with respect to dropping their rates once your mortgage has been approved. When you go into a holding pattern after your mortgage has been approved but before it has finalized rates can change. If they go up, you are covered by the rate you have in place. If they go down, how does your lender deal with your file? Some lenders won’t drop your rate. Some lenders will drop it once. Some maybe twice. There are a few lenders that will drop your rate an unlimited number of times up to a few days before your mortgage finalizes. When I am choosing a lender for my clients this is absolutely one of the most important things I consider. All things being equal, if I can place a mortgage with a lender that offers unlimited rate float downs I will. I watch my calendar of upcoming closings and proactively reach out to those lenders to request better rates for my clients. It’s a win to be able to get the benefit of falling interest rates without having to change lenders. If you are buying a home, renewing your mortgage, or looking to refinance this is a key question you should ask your mortgage person. Find out whether they will adjust the rate on your mortgage and what the process is (do you have to request this?). At the same time, find out how many times they are able to reduce the rate for you. Regardless of the answer I suggest touching base with your mortgage person or lender periodically up to the time your finalize your mortgage to confirm you are receiving the lowest rate they have available for you.
Share by: