What Is Automatic Mortgage Renewal in Alberta?
Short answer
Automatic renewal happens when your term matures and you have not signed a negotiated renewal. The lender rolls you into a default product — often a 6-month open or 1-year closed term at a posted or premium rate. You stay current on payments, but you may pay more than necessary until you act.
The plain-English version
Mortgage contracts include auto-renewal clauses so the loan does not fall into technical default. The automatic product is rarely the best rate. Open auto-renewals allow penalty-free payout or switch but charge higher interest. Closed auto-renewals lock you in with prepayment penalties if you leave early.
Automatic renewal is not the same as auto-debit payments — it is about the rate and term applied after maturity. You should still receive notice before maturity; if you did not, contact your lender immediately.
Alberta-specific considerations
- Alberta snowbirds or FIFO workers should ensure mail or online alerts reach them before maturity to avoid unwanted auto-renewal rates.
- If you are mid-switch to a new lender, coordinate funding date so you are not auto-renewed into a closed term with the old lender.
- Collateral-charge and readvanceable files auto-renew under the same charge structure — switching later may still need full discharge.
Example scenario
Maturity passes with no signed renewal. Lender auto-renews $295,000 into 6-month open at 6.85% while market 5-year fixed is near 5.2%. Extra interest cost about $240/month for six months if you delay — roughly $1,440 before you negotiate or complete a switch.
Common mistakes to avoid
- Treating automatic renewal as a good long-term rate.
- Not knowing whether auto-renewal is open or closed before making plans.
- Ignoring renewal mail assuming the lender will “give the usual rate.”
- Staying on auto-renewal for a full year without reviewing options.