Most Canadian Mortgage Lenders will allow you to begin an early mortgage renewal process. This is usually within the last 4 months of your “soon to end” term, but beware no penalties are being “blended” into your new term. Before making your decision, you should attempt to find a better rate or a different lender all together without paying extra fees. If you are renewing your mortgage dollar for dollar than you should qualify for a “no fee switch” allowing you to move to a new lender without any fees. Bear in mind that if you do not move “dollar for dollar” but want to “increase your mortgage” by any amount, this is now a new mortgage which will most likely have some minor fees.
At the end of your mortgage term where you still have a balance, you will need to renew for another term. Mortgage terms range from 1-10 years with varying rates, the most popular is usually a 5 year term. Remember, with each mortgage renewal also comes the opportunity to assess any new financial goals you may have or upcoming. This may be the best time to upgrade your car, update your home or simply consolidate some unsecured high interest debts like credit cards and/or department store cards.
Your current mortgage provider will mail you a renewal form that you could quite easily sign and return but you may want to take this opportunity to chat with a mortgage broker and explore all your options. Remember, information is free and an informed borrower is a smart borrower.
- Mark Your Mortgage Maturity Date In Your Calendar And Set The 120 Day Alarm!
This is the time (120-90 days) to start exploring and gathering your information by contacting a Mortgage Broker as well as your own lender. If you’re not ready to speak with your mortgage broker or lender at this time then you can at least start researching what other options you may have available. Knowing which lenders are offering what you’ll be better armed to negotiate at renewal time.
- Consider Your Financial Goals
Because so much can happen throughout your actual mortgage term, you should assess your current and upcoming financial status at the beginning of your mortgage term so you can be ahead of any surprises. Perhaps you’ll need a new car in the coming months, a new baby in the coming years or perhaps even retirement in your coming future. Whatever your needs are or will be, make sure you realise them when committing to your next mortgage rate, term and product.
- What Are Your Mortgage Needs
- You should also make a list of what you’re looking for in your next mortgage product.
- Can you increase your monthly payment?
- Can you skip a payment?
- Are there any bonuses, raises or potential inheritances coming your way?
- Can you pay off your mortgage without exaggerated penalties? (Fixed vs Variable)
- Can you pay bi-weekly vs monthly?
- Is an attached line of credit available for you for future use?
- Will you be selling, upgrading or downsizing in the coming years? (Portable or Assumable)
- Be Sure To Be Ready to Renew in the Last 30 Days
By law, your lender must send you a mortgage renewal statement at least 3-4 weeks before the end of your term, this is when they mail you a renewal offer for their current lowest “posted rate” that is good for the 30 days. You should have done enough research by now to know whether or not it’s the best mortgage rate available for you – and if not, you have the right to try to negotiate. If their offer is not the best you think you are entitled to then it’s time to contact a broker but be prepared with all documentation in order and ready to go.
- Time To Decide, Switch Or Stay?
You’ve done your homework, you’ve considered your future financial needs and you know what product and terms you need so it’s now Decision time. If you decide to stay with your existing lender then you can either choose to sign and accept their renewal offer, or you can now sit down and try to negotiate a better offer with them face to face. But if you choose to switch mortgage providers, then a little more paperwork is required but it’s a lot easier than one thinks. Your Mortgage Broker should be willing to educate you up front before you sign anything with rates and products. Once you decide to proceed then you only need a short list of current documentation which your broker will provide. Remember that sometimes the minimal fees associated to switch lenders may result in larger savings from signing and accepting your current lenders higher rate.