1. Signing the first renewal offer
The single most expensive habit is auto-signing the renewal letter your bank mails you. That posted renewal rate is almost always negotiable, and competing lenders will often beat it. Start shopping 120 days before your term ends and bring quotes back to your lender.
2. Ignoring the penalty fine print
Borrowers rarely read how their break penalty is calculated until they need to break. Fixed mortgages use the interest rate differential (IRD), which at a big bank can run into the tens of thousands. Variable penalties are usually just three months' interest. If you might move or refinance, this difference matters enormously.
3. Chasing the lowest rate only
A headline rate can hide restrictive terms: limited prepayment privileges, high penalties, or 'bona fide sale' clauses that trap you. The cheapest rate is not always the cheapest mortgage once flexibility is priced in.
4. Skipping the prepayment privileges
Most closed mortgages let you prepay 10–20% of the original balance each year penalty-free. Used even modestly in the early years — when most of your payment is interest — prepayments can shave years off your amortization and save tens of thousands in interest.
5. Forgetting to re-shop at every renewal
Loyalty is rarely rewarded in mortgages. Treat every renewal like a brand-new mortgage application: compare multiple lenders, weigh fixed against variable, and confirm the term still fits your plans. A single afternoon of comparison can be the highest-paid work you do all year.
