When the term on your mortgage expires it is time to renew or transfer your mortgage. At this time, you will be able to re-negotiate your interest rate based on current market conditions. The bank or financial institution you are currently with will likely offer you a renewal, however… DON’T TAKE THE FIRST OFFER!
It is estimated that over 65% of Canadians simply re-sign their mortgage with the same lender at renewal time. The rate and terms offered are rarely questioned as most people choose to avoid the hassle of renegotiating. Lenders know this and therefore won’t offer the lowest rate or best terms available.
A mortgage is typically the largest expense you will ever have and making this mistake can cost you thousands! Remember that you do not have to renew with the same lender and should always consult with your mortgage broker prior to accepting an offer. Your broker will be able to zero-in the perfect mortgage product (with the most competitive rates and terms) by helping you answer a few important questions:
Are you happy with your current lender?
Does your budget currently allow for you to increase your payments, thus paying your mortgage off faster and more affordably?
Are you satisfied with your current payment schedule? Are you interested in changing payment frequency to pay your loan down more quickly?
Do you need to consolidate your high-interest rate debts in exchange for increasing your mortgage loan amount?
Are you interested in making additional prepayments or applying for varying pre-payment privileges?
Do you need to consider life insurance to protect your mortgage balance and your family?
It is also possible to renew/transfer your mortgage early. You may opt to renew early if the current interest rates are much lower than your existing interest rate. There can be drawbacks to renewing your mortgage early such as payout fees, but these fees are often far less than the money you will save at the new lower interest rate. If you are not sure if it makes sense to renew early, contact us and we will be glad to run the numbers for you.
Get Pre-Approved For Your Renewal in Advance
It is always wise to get pre-approved 4 months before your renewal date. This will allow you to get a rate hold and ensure you have the most competitive rate and terms leading up to your date of renewal. If you arranged your mortgage with us originally, we will be sure to contact you 4 months in advance and help you make the right decisions.