A lot of people cringe at mortgage renewal time and think it’s a complicated, awkward process. However, when armed with a bit of time to research and shop around, renewal time doesn’t have to be difficult at all, and it will help make future renewals a piece of cake.
When we arrange for our first mortgage, we agree to terms and rates that typically expire anywhere from 6 months to 5 or even 10 years. Sometimes there may be a drastic change in interest rates during that time, and other times there is very little or no change.
However, mortgage renewal time is an important time to assess your current finances and ensure that your next mortgage is a truly great match. Renewals don’t have to be a headache, especially when you can save a lot of money on interest payments, consolidate debt, or pay down your mortgage more quickly.
How renewals work
Your lender or bank who holds your mortgage is responsible to notify you in writing within 30 days of its expiration, most often by means of a renewal form. This renewal form or slip will outline your proposed new mortgage term and rate. Typically, all that’s required is for you to send it back signed and dated, and voilà, your mortgage has been renewed for another term. Easy, right?
What many Canadians don’t know is that at renewal time, you can not only negotiate new mortgage terms and rates, you can also switch from your lender to another one if you so choose.
Take time & get prepared
A lot can change in our lives between one mortgage term to the next, such as a new baby, new marriage, new job (or no job), and so on. The mortgage you signed 5 years ago may not work for you anymore, so you wouldn’t want to renew without looking at options that will better suit your financial needs.
However, when it comes to mortgage renewals, you can’t leave it until the last minute. The best time to start shopping around is 2-3 months before the renewal date.
The mortgage renewal slip that’s sent in the mail is very appealing for one main reason; it’s fast and straightforward, but it may not have your best interests at heart. By not taking action to review your renewal options, you could miss out on some serious cost-savings.
Talking to a mortgage broker is always a great place to start when it comes to mortgages and renewals, as brokers work with a variety of lenders to find the best rate with all the terms and flexibilities you want in a mortgage. If you’d like to apply for your first mortgage, or renew yours for the 1st or 5th time, that’s what I’m here for. Connect with me today to schedule an initial call and let’s get started.
Tatum Neufeld, BComm
Mortgage Broker • Mortgage Tailors