Congratulations! You just become proud homeowners and enjoying your new space. It is amazing to get approved and be able to buy your dream home. While purchasing a property, you enter into an agreement for a specific period known as the mortgage term. Currently, the mortgage terms are usually for around 5 to 10 years, and on completion, you have to renew your mortgage term.
During renewal, you realize that a lot may have changed when you purchased the mortgage financing. You must take account of your financial standings to review your financial goals for the next coming years. It will help you map out a plan to manage your debts and savings and find a better rate if available for the new mortgage term.
It is advised to start shopping early for mortgage renewal – you can begin six months before the end of your agreement. You can start studying the market trends and compare rates from different lenders. You can also reach out to the mortgage broker to evaluate your requirements and help you find the best available mortgage rate for renewal.
A few weeks before the renewal, your current lender will inform you about your due date by sending a letter regarding your renewal. It will most likely contain the lender’s initial offer that is always negotiable. A mortgage renewal is another opportunity to reassess your financial needs and one of the largest financial commitments. You can try to look for a better term and interest rate that better suits your current and future financial needs. Also, if you are not satisfied with your current lender’s services, there could not be a better time to switch to a new lender.
Did you know that two-thirds (65%) did not compare mortgages from more than one lender when they last renewed? This means that it could end up costing you a lot of extra money, and you could be in debt for a longer period. If you choose to auto-renew, you tend to pay 1/2%-3/4% more than necessary, or worse! If you sign renewal statements at the bank’s “special offer” rate, you are signing up to pay well above the market. Also, with purchase volumes down over 30% following the COVID-19 outbreak, less-competitive lenders have been trying to make up for lost profit by targeting renewals. And some are making inferior offers as high as posted rates! Hence, choose to work with a mortgage broker that can correctly guide you through the process of mortgage renewal.
Are you avoiding switching lenders as you fear that you may not qualify with a new lender? But beware, lenders often offer a higher rate than a new client because they’re hoping the ease of renewal will keep you from seeking a new lender and lower rate. Decide if you want to save a few hundred dollars through the approval process or try to find a lower rate to save thousands of dollars over the next term.
During a mortgage renewal, you have the option to:
a) Changing the frequency of your mortgage payments
b) Mortgage Prepayment allowed once per year
c) Change amortization period
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If you’re ready to get started with your mortgage renewal process, feel free to reach out to us for any questions. We can help you to get all your mortgage-related queries answered. You can reach us at 905.997.7001 or email us at email@example.com.