When you signed your mortgage contract and got the keys to your new home, thoughts of renewal were a long way off. But now, the time is fast approaching where you’ll have to make some big decisions – should you stay with your existing lender or look for someone new? Whichever you choose, it’s important that you do some window shopping before you make a commitment and sign a new deal.
When you secured your original mortgage a few years back, the interest rate was probably very low. You know that, this time around, it’s highly unlikely that your mortgage rate will that low which is why shopping around and getting advice will be crucial. An experienced mortgage broker, like myself, can help you assess whether the mortgage rate your lender is offering you is fair or if there are better options out there. Additionally you’ll need advice as to how long of a term to sign on for and insight into where the mortgage market will go in the next few years in terms of rates.
Renewing Your Mortgage With The Same Lender
Your existing mortgage lender has to give you 21 days notice of your renewal options. Hopefully, they’ll send you a notice and offer you a decent mortgage rate for a renewed term. It’s important to note though that you don’t have to take this offer – often the banks will have a lower interest rate if you ask.
Before signing on the dotted line ask yourself these questions:
- Do you have room in your budget to increase your payments to pay off your mortgage sooner?
- Do you want to change how often you make payments?
- Are you likely to make added payments – for instance, when you get a work bonus?
- Are you happy with the service you’ve received from your current lender?
- Do you want to consolidate other outstanding debts that have higher interest rates?
If you’re happy with your lender and the terms they’re offering, signing back is the easiest option when renewing your mortgage.
What Does A Mortgage Renewal Cost With A New Lender?
When you take on a new lender a common question I get asked is “Are there costs involved?” My answer: There could be. Costs you might incur could include setup fees (which may include discharge, registration, transfer and/or assignment fees from your current lender), appraisal fees for your property, and administration fees. However, you can ask your new mortgage lender to cover these costs. (It never hurts to ask as often they will negotiate.) You may also have to pay an increased mortgage insurance premium when you switch lenders, if the amount of your loan increases or you extend the amortization period.
What If Your Bank Doesn’t Want To Renew?
Normally, if you’ve been keeping up with your mortgage payments, your current lender will approve your mortgage renewal without any issues. But they’ll still take a look at your current financial situation to make sure it’s still a safe investment for them. If you’ve taken on a lot of new debt, your credit score has dropped, or your job situation has gotten worse, your lender might decide not to renew your mortgage.
If that’s the case, what do you do?
Well, this is when a mortgage broker is your best friend. I have more options than the banks and mortgage solutions many of the banks can’t offer. So, before you do something drastic, like sell your house, let’s talk through a few different scenarios that could work in your financial situation.
Can You Renew Your Mortgage Early?
You don’t have to wait until your mortgage term is almost over to renew your mortgage. Most lenders let you renew your mortgage early, up to four months before it ends. But there’s a catch: if you switch to a different lender before your term ends, you might have to pay a penalty.
Whether you renew early or not, use about four months in front of your renewal date to think about your choices and weigh your options. Renewing your mortgage ahead of time can save you money if you think interest rates will go up soon. When rates are low or you think they might go up soon, it’s smart to renew early and lock in a better rate for your new term. But if you believe rates will go down soon, it might be better to wait until your current contract is almost done. Talking to a mortgage broker will help you understand the current market and the best options and interest rates for you and in case you weren’t aware, there is no cost to work with a mortgage broker, so why wouldn’t you, right?
Ready to Renew Your Mortgage? Give Me A Call
If you’ve taken a look at your mortgage contract and realized your term is almost up, it’s time to take action. Don’t hesitate to give me a call today at (705) 315-0516 or click here to book a consultation with me to get the ball rolling. I can help you review your mortgage options and find the best rate and solution for you and your family. Don’t just sign back your renewal without shopping around — it could cost you more in the long run!