Mortgage brokers share options for homeowners facing a mortgage non-renewal

Getting your mortgage renewed can be stressful for some homeowners, but getting a non-renewal from your lender can take that stress to a whole new level.

As a wave of homeowners who bought at rock-bottom interest rates prepare to renew at higher rates this year, a small number of them will be cut off from their lender.

Leah Zlatkin, licensed mortgage broker and LowestRates.ca expert, said lenders often reach out months ahead of the renewal date.

“If you are somebody who has had trouble making your payments on time … and they see that there’s a pattern of missed payments on credit cards or negative balances in chequing accounts or negative balances in savings accounts, they may second-guess that renewal, and they may call you to say they’re not renewing your mortgage,” Zlatkin said.

Non-renewals are mostly underpinned by financial challenges, but another reason for non-renewal could be if the lender views the homeowner as what they call a serious character risk. For example, she said a bank may have reservations about renewing a client whose name is in the news regarding a criminal trial for fraud.

Over the past few years, the Bank of Canada hiked its key lending rate to quell inflationary pressures after the COVID-19 pandemic. Though borrowing costs have come down from their recent peak, the current policy rate sits at 2.25 per cent, about two percentage points higher than where it stood in the early years of the pandemic.