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Getting The Best Rate When Renewing Your Mortgage

Getting The Best Rate When Renewing Your Mortgage

man looking at mortgage renewal options

man looking at mortgage renewal options

Did you know? 88% of mortgage holders renew with their existing lender. But what if I told you that you may get a better rate when renewing your mortgage with a different lender? At the end of the day, it all comes down to money. Getting a lower interest rate means you will be paying off more on the actual principal of your mortgage, rather than paying more in interest with skyrocketing mortgage rates.

Lower interest rates = more money in your pocket.

For example, if you still have $500,000 owing on your mortgage over a 25-year amortization term, you can save up to $61,727 in interest by having a 0.50% lower mortgage rate over your mortgage term. That’s a lot of money you could be saving.

When is the best time to renew your mortgage to find the best rate possible?

Mortgage rates can be usually held for 120 days in terms of a mortgage pre-approval. But your existing lender normally will contact you 6 months leading up to your renewal to try to send you an “early renewal” deal. As a certified mortgage broker, my advice is to instantly call me to give you my expert opinion on whether it’s a good deal or not. It’s best to shop for the lowest mortgage rate at this point — well in advance — so you’re not panicking and end up settling for the mortgage rate they give you.

Learn about all your mortgage options before renewing

Interest rates change and so does the housing market. Knowing which mortgage options are best for you takes lots of research and planning. This is why working with a mortgage broker is your best bet for securing a low mortgage rate when you renew. And, the biggest benefit of working with a mortgage broker is that it doesn’t cost you anything and we do all the leg work. It’s like having a personal assistant to do all the mortgage rate shopping for you.

Should I choose a variable-rate mortgage or a fixed-rate mortgage?

Variable-rate mortgages, be aware of:

  • Interest Rate Fluctuations: With a variable-rate mortgage, your interest rate may change over time, usually based on fluctuations in the market interest rates.
  • Potential Savings: If interest rates decrease, you may benefit from lower mortgage payments and potentially save money over the long term.
  • Risk: On the flip side, if interest rates rise, your mortgage payments could increase, potentially putting a strain on your budget.

For a fixed-rate mortgage, be aware of:

  • Interest Rate Stability: A fixed-rate mortgage offers a set interest rate for the entire term of the mortgage, providing stability and predictable monthly payments.
  • Budgeting: Fixed-rate mortgages make it easier to plan your budget since your mortgage payments remain constant.
  • Risk Mitigation: You are protected from potential interest rate increases during the term of your mortgage, which can provide peace of mind.

Should I choose a shorter or longer amortization period for my mortgage?

Shorter amortization period, you should know:

  • Faster Mortgage Payoff: Choosing a shorter amortization period, such as 15 or 20 years, allows you to pay off your mortgage more quickly, potentially saving you interest costs over the long term.
  • Equity Build-Up: With accelerated payments, you build home equity at a faster rate, which can be beneficial if you plan to sell or refinance in the future.
  • Higher Monthly Payments: Opting for a shorter amortization period means higher monthly mortgage payments, as the loan is spread over a shorter time frame. You should ensure that your budget can comfortably accommodate these higher payments.

Longer amortization period, you should know:

  • Lower Monthly Payments: A longer amortization period, such as 25 or 30 years, results in lower monthly mortgage payments since the loan is spread out over a longer period. This can provide more financial flexibility in your monthly budget.
  • Cash Flow Management: Lower monthly payments can free up cash for other expenses or investments, allowing you to allocate your funds according to your priorities.
  • Total Interest Costs: Keep in mind that with a longer amortization period, you will pay more in total interest over the life of the mortgage compared to a shorter term.

Think about your financial and homeownership goals for the next couple of years before making a decision.

Ask yourself these questions can help you make the right decision for you and your family:

  • Is it likely that I will be relocating in the near future?
  • Are there any significant upcoming financial obligations or ventures that would benefit from affordable financing options?
  • Are there any high-interest debts that could be combined into a single, more cost-effective payment?

Gaining a clear understanding of your mortgage and homeownership objectives will assist in devising an optimal strategy for mortgage renewal, including considering mortgage features, flexibility, and the appropriate term length.

Communicate with your current mortgage lender that you’re looking for better rates and they might offer a better rate.

You never know what may happen. If you’ve always paid your mortgage payments on time, they may try to keep you as a customer and offer an even lower mortgage rate for you. Doesn’t hurt to ask, right?

When your mortgage is close to renewal it’s time to shop for better mortgage rates.

Don’t limit yourself to renewing with your current lender. Explore other options and compare rates from different lenders to ensure you’re getting the most competitive offer. Consider your financial goals, cash flow requirements, and long-term plans when deciding on your mortgage options. It’s advisable to consult with a mortgage professional, like myself, Darren Robinson so that I can help you read between the lines to ensure you’re not missing anything in the process. I can help evaluate your specific situation and provide guidance tailored to your needs to help you navigate the confusing mortgage world. I have access to multiple lenders and can help you find the best rate based on your financial profile. When you’re ready to negotiate the best mortgage rate possible let’s talk and make a plan to save you time and money! Sign up now for a free consultation or give me a call at 705-315-0516 today!

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