Renewals

• Renewing Your Mortgage

When your mortgage comes up for maturity, you are free to renew your mortgage with your existing bank, or take it to a lender who offers you a better rate – at no penalty. Do not sleepwalk through your mortgage renewal! Auto-renewing your mortgage and not getting fully discounted rates could cost you hundreds of dollars each month. Allow your mortgage broker to investigate what are the best options available to you.

Mortgage renewal is an important time to determine whether your personal circumstances have changed, and whether based on these circumstances, your strategy of paying your mortgage should be adjusted. Whether you should consider fixed or variable rate, whether to increase or decrease your payments, or whether to take advantage of prepayment privileges to pay off your mortgage faster – it is important to invest a few minutes of your time and address these important issues that could save you thousands of your hard earned, after-tax money.

Mortgage renewal is also an important time to consider whether to roll your high-interest credit cards and other debt into your mortgage to get one lower payment, boost your monthly cash flow, and save on interest costs. It is also a good time to consider if it makes sense to take equity out of your home for renovations or major expense in the near future.

If you get a proper advice at this crucial renewal time, you could save much more than by simply concentrating on your single task on hand – signing the renewal papers.

Here are some facts regarding mortgage renewals:

~ The process of switching/transferring your mortgage from one bank to another usually doesn’t involve any fees. The cost of the switch, appraisal fee and transfer-out fee is either fully, or almost fully covered by the new lender. The process itself involves minimum time on your end. You will not even have to leave the comfort of your home.

~ Most institutions allow mortgage brokers to hold the interest rate for as long as 120 days. In other words, you can start shopping for the best rate as early as 4 months prior to your maturity date. Most lenders send their renewals only about a month prior to your renewal date, potentially missing out on some 3 months when you could have secured a lower rate.

~ Statistics say that some 70% of homeowners sign a renewal form without asking any questions, or barely influencing the change in the rate offered. Don’t allow yourself to be reactive, instead, have a control over your renewal process – let the mortgage broker negotiate rates on your behalf. You have nothing to lose.

~ The worst thing that can happen is for your bank to offer you a better rate so you don’t leave them.