Are you close to the end of your mortgage term?
When you choose a fixed or variable rate mortgage, you choose a term where you are guaranteed a certain discounted rate at the bank from 6 months to 10 years. Once that term is near completion, normally your bank will send you a letter stating your renewal date and the rates you would be eligible for if you were to renew with them.
If you still owe a balance, you will need a mortgage renewal for another term. With each renewal, comes the opportunity to assess your current mortgage and compare it to your future goals as well as competitive rates.
You have two options when you reach the time for a mortgage renewal:
- You can simply sign the piece of paper that the bank sends to you
- You can reach out to a mortgage broker like myself to see if there are better rates available.
In this blog post, I’ll break down the mortgage renewal process and what to do if you want to look and see if you qualify for a better rate.
The renewal letter.
Like I mentioned above, when you come near renewal you will receive a notice making you an offer and saying you can renew early without penalty. And, while you can sign it and continue without any extra effort, this may not be in your best interest! It is common for the bank / lender you are currently with to offer you a slightly higher rate than what is available as they already have your business.
There is generally minimal or no cost to switch your mortgage to another bank. The difference between staying with your current bank is all you have to do is verbally tell them to renew, whereas if you want to switch banks your income vs. debt must qualify to switch lenders. But, the effort may be worth it in the long run if you’re saving money.
So, where do you begin?
Reach out to a mortgage broker early.
If you’re interested in a mortgage renewal with a different bank/lender, it’s important to start the process early. Most banks allow you to begin an early mortgage renewal process four months before your current mortgage ends.
By starting earlier, this allows me to start researching your options. I’ll be able to find what lenders are offering and begin the qualification process for you.
Consider your financial goals.
A lot of things can happen from the time you get your mortgage to when it’s time to renew. It’s important to discuss and consider your financial goals. You could have gotten a raise at work or even retired. You could have had a baby or you may need to help your child pay for university. There are so many potentials.
Consider if you want to access some equity. If there’s a chance that you’re going to need to move within five years, that should also be discussed with your mortgage broker and will factor into your decision.
Whatever you need, make sure to consider it all and discuss it with your mortgage broker when speaking with them. All of these considerations will affect and change your mortgage renewal situation.
Make your decision.
After reaching out to me, and going through the qualification process with another lender, we will be able to determine where the best rate for your mortgage renewal is. If you decide to stay with your current lender, simply sign your paper and continue on your mortgage repayment plan. If another bank has a better rate, we will go through the process of getting you a mortgage renewal offer.