Before the end of your term, you will have to renew your mortgage unless you sell your home before your mortgage term ends. A mortgage renewal is the process of taking the outstanding balance of your mortgage loan and renewing that loan for another term at a new mortgage rate. Typically, you want to renew your mortgage when rates are lower than your current rate.

If you don’t already know the maturity date (the date your mortgage term ends), you will know it is time to renew your mortgage when you receive a renewal slip in the mail from your lender. The renewal slip contains a new mortgage rate and term offer which you can choose to sign and accept or decline. However, before you choose to renew your mortgage for the first rate you are offered, there are a few important things you should keep in mind.

Your financial goals

If your mortgage contract is with a federally regulated financial institution, the lender must provide you with a renewal statement at least 21 days before the end of the existing term. Your lender must also notify you 21 days before the end of your term if they won’t renew your mortgage. When your mortgage term comes to an end, you have to pay off your mortgage in full or renew it. Before you decide though, it is good to think about your financial goals and whether renewing your mortgage will interfere with those goals. To help you find the right mortgage that meets your financial needs, consider the following:

• Does your budget allow you to increase your monthly payments to pay off your mortgage sooner to save on interest?
• Do you want to change the frequency of your payments?
• Do you want the ability to make additional payments on top of your regular payments?
• Are you happy with the services provided by your current lender?
• Do you want to consolidate your debts that have higher interest rates?
• What are your insurance needs? (whether or not you still need life, illness, disability, or employment insurance).

Also, think about your long-term goals. As an example, if the new mortgage contract your lender sends to you is a five-year term and you plan on moving within those five years, you may want to consider a shorter mortgage term that matches the length of time you plan to stay living where you are. Be sure that when renewing your mortgage, you choose the right mortgage products that meet your needs and will help you reach your financial goals.

When you should start shopping around for a new mortgage 

If the mortgage renewal your lender sends you does not meet your needs, find out what your options are. But try to do this early. Most lenders may send you a renewal slip roughly 30 days before your current mortgage term reaches its maturity date. However, you can start negotiating as early as 120 days before your mortgage term ends. If you start doing your homework 120 days in advance and you are unable to negotiate a better offer with your current lender, you have time to do your research and look for a new lender. While you may not be able to switch your mortgage over before the renewal date, doing this early will help you avoid any last-minute decisions and scrambling around at the last second.

Know that you CAN ask for a better mortgage rate

Lenders make it easy for you to renew your mortgage by providing you with a renewal slip. However, this slip doesn’t always contain their best offer for a mortgage. So, before you sign and send back that renewal slip, find out if your lender can provide you with a better contact that better suits your financial needs. Even a slight change in rate and term length can make a big impact on your finances. Don’t be afraid to talk to your lenders and negotiate a better mortgage renewal. Doing so is a financially savvy move. Being able to access better mortgage products is one of the biggest reasons why people choose to switch mortgage lenders.

Always work with a mortgage broker 

Can’t find the time to shop around for a better mortgage? Not sure what you’re looking at when you do shop around? While it may seem like a lot of effort, it really isn’t. Or at least it doesn’t have to be. When you are investigating your mortgage options, it is smart to work with a mortgage broker. Instead of going from lender to lender trying to find the best mortgage products for your needs, a mortgage broker can compare lenders for you to find the best mortgage solution with the options you need. This not only saves you time but, their expertise will save you money in interest almost every time.

Are you ready to start preparing for your mortgage renewal? Are you considering a switch in lenders? I’m here to help. As a professional mortgage broker with over 10 years of experience, I can help you understand the mortgage renewal process and your options to find the best mortgage suited to your needs and financial goals. To get started, click here to schedule a virtual meeting or give me a call at 705.315.0516. A better mortgage is just a phone call away!