Your Annual Mortgage Check-Up in 10 Points

Like a health check-up, your mortgage deserves an annual review to ensure it remains optimal. The mortgage market in Quebec constantly evolves: rates fluctuate with Bank of Canada decisions, OSFI policies tighten or loosen, and your personal situation changes. A regular check-up allows you to spot savings opportunities before they disappear and anticipate necessary adjustments for your renewal.

Why an annual check-up is essential

Most Quebec homeowners sign their mortgage and forget about it for five years, until renewal. This passive approach can be costly. Market conditions change, your property appreciates in value, your income evolves, and your debts get paid down. Each of these factors can open opportunities that only regular examination can identify. A rate gap that seemed insignificant two years ago may now justify concrete action. Similarly, an improved loan-to-value ratio can give you access to better conditions from another lender.

The 10 points to check every year

1. Current rate vs market rates: Compare your contractual rate to negotiated rates available through an AMF-certified broker. A gap of more than 0.50% warrants thorough analysis. Do not compare to banks' posted rates, which are window rates often marked up by 0.30% to 1.00% from actual rates.
2. Mortgage balance and residual amortization: Check the remaining balance and residual amortization on your annual statement. Compare with your repayment goals. If your residual amortization exceeds your retirement horizon, it is time to accelerate.
3. Prepayment privileges used vs available: Most Quebec contracts allow an annual lump-sum payment of 10 to 20% of the original balance and a payment increase of 10 to 20%. Unused privileges represent lost savings. Calculate how much you could save by using them.
4. Current loan-to-value ratio: Estimate your property's current value via the municipal assessment roll (adjusted 10 to 20% upward) and comparable sales on Centris.ca. A ratio that has dropped below 65% can give you access to better mortgage conditions.
5. Equifax and TransUnion credit scores: Check your credit score for free once a year. A score above 680 qualifies you for the best rates. Identify and correct any errors that could hurt your next negotiation.
6. Term maturity and renewal options: If your term expires in less than six months, start preparing your renewal now. Lenders often offer retention rates 120 days before maturity. An AMF broker can lock in a better rate in advance.
7. GDS and TDS debt ratios: Calculate your gross debt service (GDS) and total debt service (TDS) ratios. OSFI requires a maximum GDS of 39% and TDS of 44%. Improved ratios since obtaining the loan can open refinancing possibilities.
8. Mortgage insurance coverage: Is your mortgage life and disability insurance adequate and at the best cost? Individual insurance is often 30 to 50% cheaper than lender insurance, with more flexible and portable coverage.
9. Impact of recent life changes: A change in income, a birth, a divorce, a new job, or a renovation project may require adjusting your mortgage strategy. Assess whether your current mortgage still aligns with your reality.
10. Long-term repayment strategy: Is your mortgage aligned with your 5- to 10-year goals? If you aim for full repayment before retirement, verify that your current pace allows it. If not, explore available acceleration strategies.

Frequency and best time for the check-up

Perform this check-up at least once a year, ideally on a fixed date (for example, in January or on your mortgage anniversary). Also do it at every major life change: new job, salary increase, birth, separation, inheritance, or purchase plans. The critical moments are the 6 to 12 months before your term expires, when you have the most negotiating leverage. The annual check-up takes about 30 minutes with your statements in hand and can save you thousands of dollars over the life of your mortgage.