Renewal: your bank's letter is an opening offer

A few months before your term ends, your lender mails you a letter. It offers a new rate, a new term, and a line to sign. It is simple, it is fast, and that is exactly the point.

But a renewal is not paperwork. It is the renegotiation of a financial commitment that will follow you for years.

What the letter actually is

An opening offer. Retention departments at financial institutions have room to move, but they generally use it only when a client asks — and usually only when that client has a competing offer in hand.

Signing the first proposal without comparing means accepting the one scenario nobody had to defend.

The 120-day window

Most lenders will hold a rate for you up to 120 days before your maturity date. That window is your main source of leverage.

During those four months your file can be shopped across 25+ lenders while a rate hold protects you. If rates rise, you are covered. If they fall, most rate holds let you take the lower rate.

The rate is not the only number

Two offers at the same rate can differ by thousands of dollars depending on the contract. Worth checking:

Prepayment penalties, where the calculation varies widely between lenders. Prepayment privileges — how much principal you can pay down each year without a charge. Portability, if you might move before the term ends. And whether the rate is fixed or variable, which depends on your tolerance for movement.

The Bank of Canada announces its policy rate eight times a year, while fixed rates track the bond market more closely. Both are worth understanding before you commit to a term length.

How I handle a renewal

I compare your letter against the market, explain the conditions in plain language, and lay out the options that fit your situation. If your current institution is still the right choice for you, I will say so — but you will know instead of hoping.

Comparing costs nothing and commits you to nothing. Reach out roughly four months before your maturity date.

Certain conditions may apply. Subject to change without notice.