Are you coming up on your first mortgage renewal?
With each mortgage renewal comes an opportunity to assess your current mortgage and compare it to any new financial goals you may have.
Your current lender will send you a renewal slip in the mail that you could easily sign and send back, but if you want to ensure all your needs are met, I suggest taking this proactive approach with your next mortgage renewal:
1. Start shopping 4 months before your renewal is up
Mark your current mortgage term’s maturity date on the calendar, then count back 4 months (120 days) and mark that too. This is the date lenders will let you start the early renewal process, meaning you could renew early without having to pay a payout penalty. By finding out which lenders are offering what, in terms of mortgage rates, prepayment options and other terms and conditions, you’ll be better prepared to negotiate when you are ready to renew.
2. Consider your financial goals
Let’s face it: a lot can happen throughout your current mortgage term. Your financial goals at the beginning of your current mortgage may no longer match your current goals today. You could have received a raise, lost income, had a baby, or need to pay for your child’s university tuition. If there’s any chance you’ll need to move in the next 5 years, that should be factored into your decision. Whatever your needs are, make sure you consider them when choosing a mortgage rate, term and product.
3. Outline your mortgage needs
Along with your other financial goals, you should make a list of what you’re looking for in a mortgage product. To start, ask yourself a few questions:
- Does your monthly budget have room for you to increase your mortgage payment amount? (If so, review the monthly prepayment options in the terms and conditions.)
- Do you think you’ll receive any bonuses or inheritances that you could put towards your mortgage? (If so, you’ll also want to look at the lump sum prepayment options.)
- Do you think you’ll have the option to pay off your mortgage entirely, in this next term? (If so, consider the prepayment penalties that go with fixed vs. variable rate mortgages.)
- Do you think you will want to borrow more money from your lender during this next term? (If so, you’ll again want to consider the prepayment penalties involved in a refinance, or look at collateral mortgages instead.)
- Is there any chance you’ll be selling your home and/or moving in the next 5 years? (If so, you may want a mortgage that is portable.)
4. Be ready to renew in the last 30 days
By now, you should have done your research with a Mortgage Broker and reviewed the current offer from your lender to determine if you’ll stay with your current lender or switch to another lender.
5. Make a decision
After shopping around, considering your financial goals, outlining your mortgage needs and receiving a mortgage renewal offer from your current lender, it’s finally time to make a decision. If you decide to stay with your current lender, you can either choose to sign and return the mortgage renewal offer they sent in the mail, or try to negotiate a better offer. Switching providers will require a little more paperwork, but you may find that doing so will give you access to better mortgage rates. Just be prepared to submit a mortgage application, as you will be qualifying at the current qualification criteria at that time. There may also be fees involved with making the switch.
If you’re ready to start the mortgage renewal process, give me a call at 780-288-0643 and I can help you find the best mortgage rate, term and product for you!
Tatum Neufeld, BComm
Mortgage Broker • Mortgage Tailors