Can a Mortgage Company Refuse Your Renewal? Yes, Here’s When and Why
Yes, Your Lender Can Refuse to Renew Your Mortgage
Most homeowners believe mortgage renewal is just a formality. You sign a new mortgage commitment with a new rate, your payments keep going, and life goes on.
I hate to break it to you, but I’ve seen people blindsided by letters telling them their lender will not renew their mortgage, or offering rates so silly that you wonder “do you even want me here?”.
I know because I used to work as a renewal account manager for a major mortgage lender in Canada.
I was on the inside. I saw those letters. And I saw the panic they caused with clients calling me, asking me “Why won’t you renew me?” and knowing my hands were tied in explaining exactly why we didn’t want them. But now, I’m giving you the low-down.
I want to be clear about something - these are reasons why I’ve seen lenders decline renewals. But at the end of the day, lenders are not required to provide you with a renewal - regardless of the reason!
Two Main Reasons a Lender Says No
1. They’re Liquidating the Loan From Their Portfolio - it’s nothing personal
Sometimes it’s not personal. Your mortgage might be part of a group of loans the lender wants to clear out. This can happen when:
They are exiting the mortgage market.
Maybe their company was purchased/restructured, and are moving away from mortgages altogether.
They no longer lend in your area.
Think: A tiny township that depends on one economy, and that economy has folded. Risk is higher than when they initially gave you the mortgage.
They want to remove certain property types or loan structures from their books.
Example: I remember one of my lenders specifically wanted modular homes off their books - even if the clients repaid their loan perfectly.
If your mortgage falls into one of these categories, you could get a renewal offer that makes no sense or no offer at all - even if you’ve been an A+ client.
2. They Don’t Want You on Their Books - and it’s very personal
Other times, the decision to refuse your renewal is personal. Lenders have strict compliance rules and dedicated teams constantly monitoring accounts for risk.
They may refuse your renewal if:
Poor repayment history – In some cases, just two NSF payments in the past 12 months can be enough, even if you repaid them immediately. I’ve seen this firsthand. To a lender, missed payments (even if made right quickly) suggest you are riskier than you looked when they funded your mortgage. Risk equals cost for their collections and legal departments, which some lenders don’t want to carry.
One missed payment? Can happen to anyone.
Two in a year? It’s starting to become a trend.
Bankruptcy - If you’ve claimed bankruptcy between your previous and current renewal, they may deem you a higher risk - even if it’s never impacted your repayment with the lender
Links to illegal activity – This could be obvious financial crimes, but it also includes extreme situations like a borrower convicted of serious crimes unrelated to money, or being connected to criminal activity such as gangs, grow-ops, or money laundering.
Activities like grow-ops don’t just create legal problems, they can also drag down the value of the home. In some cases, the mortgage on the property might exceed what it’s now worth. Rather than take that hit, lenders may “pass the buck” to another lender, treating your file like a game of corporate hot potato.
At the end of the day, the lender’s job is to maximize profit and minimize losses. If something about your file signals increased risk from their perspective (whether from payment issues, remote locale they don’t want to service anymore, criminal connections, or public relations concerns) they may decide it’s better to move you off their books entirely.
When that happens, they’ll make it clear you’re not welcome to stay, using one of two tactics…
Two Ways They Push You Out
The Gentle Push
They make your renewal offer so bad that you’ll want to leave without a fight. Watch for:
Only offering open terms with rates far above the market - usually a short-term mortgage option like 6 months, hoping you’ll just leave. In my day, I’ve seen these rates as high as 9.99% - you may as well be with a private lender at that point (and that’s exactly their point).
Offering longer closed terms but pricing them way over market rate - think like 3 percent or more over market rates.
This is their way of saying “we’d prefer you to find another lender” without sending you directly to legal. Basically saying “We’ll keep collecting the money if you want to stay and be happy with the huge premium we receive on it, but we’d also be happy if you left.”
The Hard Push
No bad offers. No soft hints. You get a letter telling you to pay out the mortgage by your maturity date. If you don’t, your file goes directly to the legal department, and their lawyers do what needs to be done to get you off their books.
What to Do if Your Renewal Is Refused
If you get a bad offer or outright refusal, time is not on your side. Here’s what to do:
Contact a mortgage broker immediately – they can access alternative lenders quickly, or provide unbiased advice on next steps.
Gather your documents – proof of income, identification, property details, and payment history.
Move before maturity – give yourself enough time to avoid legal fees and last-minute stress.
The Bottom Line
Most renewals go through without a problem, but when a lender decides not to renew you, the clock starts ticking. The earlier you act, the more options you have.
I’ve been on both sides of this process. I know how lenders think, and I know how to get you a new mortgage before things turn ugly.
Book a free consult today if you’ve received a bad renewal rate or a refusal letter. We can build a plan now so you don’t end up in legal limbo.
Jeff Dinsmore
Mortgage Broker
FSRA # 10315
VeloMortgage.ca