Renewing Your Mortgage?
What it is:
In Canada, mortgages have terms, usually 6 months to 10 years. A term is the amount of time your mortgage rate will be in effect for. When your mortgage term ends, you will either have to pay off your mortgage in full or renew it for another term. Renewal time presents an excellent opportunity to reassess what you need in a mortgage and to look for mortgage options that better ﬁt your ﬁnancing needs today.
Why it is important:
What to expect from your current lender:
Your current mortgage lender will provide you with a renewal statement at least 21 days before the end of your existing term, probably earlier. This statement will contain the same type of information as your original mortgage commitment, but it will reﬂect your most current mortgage balance, interest rate, payment amount as well as the date your mortgage is set to expire. You will also be notiﬁed at this time if your current lender is choosing not to renew your mortgage.
Financing with another lender:
You do not have to renew your mortgage with the same lender. You can choose to move your mortgage to another lender if their rate and conditions are more attractive. As long as youʼre not making any changes to your mortgage amount or amortization, some lenders offer a product where they will even cover most of the costs associated with renewing your mortgage with a new lender. About half of our lenders require you to visit a lawyer for your new mortgage, but the other half will allow you to use a closing service that costs less. But hey, if itʼs paid for, who cares? If you want to add to your mortgage say to pay off some debts, instead of renewing you are now reﬁnancing in which the process is a little more involved. But whether you are renewing or reﬁnancing, your new lender does not have a history with you so they will request the usual supporting documents like employment veriﬁcation.
Why you specialize in it
As mortgage brokers, we have access to mortgage products from over 20 different lenders. If you decide to deal with a mortgage broker, it is important to note that the broker may not be able to check what your current lender is offering you. Be sure you are comparing our best offer to your current lenders offerings. As our business is based on referrals, we want to ensure you are getting a mortgage that best suits your needs so we encourage you to be diligent and ask us any questions you may have about your mortgage options to ensure it is your perfect mortgage solution.
You should ideally start exploring mortgage options about 4 months before your mortgage therm ends. Feel free to contact banks and mortgage brokers to see how they compare when offering to ﬁnd you a new mortgage with the terms and conditions that best suit your needs. Make sure they ask you what is important to you when making a decision, is the rate number one, or are you more concerned with the pre-payment privileges so you can pay down your mortgage faster?
Take an active approach to ﬁnding your perfect mortgage solution. Remember that for most people, the mortgage payment is the biggest chunk of their household budget. Shopping around or negotiating with your current lender will save you money, donʼt take charge of the process, your mortgage might automatically be renewed for another term. This means that your may not get the best interest rates and conditions that you could have got by exploring what is available on the mortgage market today. The ﬁrst step in the renewal process is to reassess your needs. Ask yourself the following questions to help you ﬁnd the right mortgage:
• Are you looking for a mortgage product that your current lender does not provide? For example a Home Equity Line of Credit
• Does your budget allow you to increase your mortgage payments so you can pay down your mortgage sooner?
• Can you make pre-payments?
• Do you want to roll your high interest debts into your mortgage at a lower rate?
• Do you need money for a major renovation or investment?