What is a mortgage renewal? Today and Yesterday.

A Man, a Mortgage, and 1934

A Story of Renewal During the Great Depression

James Whitaker had calloused hands and a quiet pride that came from five years of hard work, both on the factory floor and inside the four walls of the modest brick house he bought in 1929.  He had saved up for the down payment in order to get the house for over 7 years. 

He had signed his mortgage papers just days before the crash.

Back then, banks didn’t offer long amortizations or rate shopping. He borrowed $2,500 which was half the value of the house.   In those days an insured mortgage was not a thing, and the only mortgage available was if you put down 50%.  The term was a 5-year term and a balloon payment due at the end.  In those days it meant that the mortgage was entirely due at the end of the term, no amortization of 25, 30 or even 40years.  That could be a little stressful. 

That renewal date? It was now.

And 1934 had not been kind.

The factory where James once worked full-time had cut shifts by more than half. He was now earning barely $10 a week. His wife, Clara, had started taking in laundry from neighbors. Their two children, Tommy and Ruth, understood what it meant when there was “only soup” for supper.

But James had never missed a payment. Not one.

Even if it meant selling his pocket watch. Or skipping new shoes.

Because in 1934, losing your home wasn’t just about moving, it was about shame. It was about failure. It was about nowhere else to go.

The renewal date.  He walked into the bank on Main Street in Hamilton, Ontario, his wool coat frayed at the cuffs, his shoulders set in steel. The mortgage manager, a man younger than James by a decade, barely looked up.

“Mr. Whitaker. You’re here to renew?”

James nodded. He pulled out the crumpled ledger he used to track every payment. Every nickel accounted for.  He made those payments with pride and thinking of his family, his children and giving them a future. 

The banker skimmed the papers, adjusted his tie, and said:

Your balloon payment of $2,750 is now due in full, do you have the funds to pay it?  James started to sweat, and thoughts of his family and flashed through his head, and how hard he had worked and what he would do if they lost the certainty, the memories, the love that he was creating in his home. 

Before he could muster up anything out of his throat, the mortgage manager than said, “or we convert it into a new 3-year note at 8%.”

James swallowed hard.  Even though he was relieved, the original rate had been 6%.

“Eight percent?” he asked.

“It’s the best we can do, sir. Credit is tight. We’re lucky we’re renewing at all. Many homes are going to auction.”

James stood silently. His heart thudded. He thought of Clara, the kids, the kitchen wallpaper they put up together last spring with newspaper and paste.

“Sign here, and we’ll re-advance the amount into a new term. Same monthly payments. But we’ll own more of the house than you do now.”  The house had not gone up in value, it had decreased. 

James signed.

Not because it was a good deal. It wasn’t.

But because stability was worth more than numbers.

He walked home with a copy of the new agreement in his coat pocket. Clara met him on the porch with a look that asked everything and nothing all at once.

He nodded.

“We stay.”

She didn’t cry. She just kissed his cheek and turned to stir the pot on the stove.

Mortgage renewal in 1934 wasn’t about negotiating the best rate.

It wasn’t about online calculators or switching lenders.  The home wasn’t a financial instrument to build your wealth, it did not matter if the value was going up or down. 

It was about survival.

About staying in your home.

About honoring the promise, you made to your family and your bank, even when the world around you was crumbling.  The home was foundation for the family to build character, certainty and a life. 

What happens at mortgage renewal today?  The power struggle has changed that’s for sure, not to mention the outlook on the home. 

 When your mortgage term ends, typically after 1 to 5 years, you’ll need to renew the remaining balance on your mortgage with your current lender or switch to a new one. This is called mortgage renewal.  Only in payments of severe delinquency do we mortgages not being renewed today.   It is an expectation that it is renewed not a hope.   For most Canadians when your mortgage matures you are walking in feeling confident, not trepidation.

A renewal offer from your existing lender can come anywhere from 6 months to 30 days before your term expires.  This offer will include a new term, interest rate, and payment schedule.  The bank is pining for your business, eager to win it and ensure you stay with them.   The consumer has the choice.  

Here’s a simple step-by-step process. 

1.    Review the renewal statement

2.    Compare rates, check what other lenders are offering. Better rates will be lower payments or faster mortgage freedom.

3.    Know your goals, if you have other debts, upcoming expenses or looking to save for retirement, incorporate this into the plan. 

4.    Negotiate or switch: If your current lender won’t budge, you can switch to another lender (a mortgage broker can help you do this easily).

5.    Submit documents (If switching): If you’re changing lenders, you will have to do the whole application process again, from income to property approval.

Today we have so many options, not like James did 100 years ago, you can pay extra on your mortgage, you can even look to re amortize your mortgage to make your payments lower.  Make sure you are speaking with a true professional that will ask you about your goals.   If there is no conversation about your next 5-10 years, you are dealing with an order – taker and not a someone who cares about your financial future.  This is not McDonald’s, this is the biggest wealth builder of you life.    Depending on your goals, and your financial situation the options are high. 

Can my mortgage renewal be denied?  It’s rare, especially if you’re staying with your current lender and your payment history is solid.  The only times renewal can be denied are if, you’ve missed payments or defaulted, or you want to switch lenders, and your situation has changed for the worse. Be aware that if your credit situation has changed your lender may not offer you a very favourable renewal, with technology today they have tools which will show the likelihood of you switching to a new lender.  This is based on your credit score. 

If you’re at risk of being denied, don’t panic, reach out to a mortgage professional before your term ends. There are often private or alternative lending solutions that can bridge the gap.

Mortgage renewal is one of the most overlooked opportunities to save thousands of dollars. Whether you’re renewing with your existing lender or switching, this is your moment to optimize your mortgage and take control of your financial future.

The mortgage renewal can be a stressful moment in your finances, make sure you have someone that has your best interest at heart advising you. 

In today’s world, your home may not be worth as much as it might have been, and your payment might be higher than what it was before, however I can assure you that no one reading this would want to switch places with the Whittaker family, and that progress is something we can all be grateful for. 

Brian Hogben