Is Your Mortgage Coming Up For a Renewal?

Introduction

Mortgage renewal is a process that occurs when the term of your mortgage contract with the current lender comes to an end. The term of a mortgage can vary, ranging from a few months to five years or longer. Unless you pay the balance in full, you are required to renew your mortgage at the end of each term. This is a good time to review your mortgage needs and make sure you have the right product. Many homeowners in Ontario choose to renew early with their bank, but this approach might not always yield the best results. This article aims to provide practical and current information to help you navigate the mortgage renewal process and ensure you’re getting the best deal possible.

Knowing What to Expect

The process of renewing a mortgage isn’t complicated, but it’s good idea to be informed and prepared for what’s to come in the months leading up to your renewal. In Ontario, as in all of Canada, mortgage providers are required to send you a renewal statement at least 21 days before your mortgage term is set to expire. This renewal statement contains important information about your mortgage, including the balance or remaining principal on the renewal date, the applicable interest rate, the frequency of payments, and the term of the agreement. Understanding these details should help you a decisions about your mortgage renewal.

Knowing Your Options

These are the options available to you:

Renewing with Your Current Lender

One of the simplest options when your mortgage is maturing is to renew with your current lender. This process is typically quick and easy, requiring no re-qualification. However, this option does not provide for the opportunity of lower rates available form other lenders.

Paying Off Your Mortgage

Another option to consider is applying a lump sum to your mortgage balance or paying it off in full at maturity. This option allows you to become mortgage-free without any penalties. However, it requires you to have sufficient funds available to cover the remaining balance of your mortgage.

Transferring to Another Lender

Transferring your mortgage to another lender at maturity is another option. This process involves a new mortgage application and requires you to provide a number of documents to qualify. In most cases, your mortgage balance and existing amortization remain the same. And because it is the end of the term, there shouldn’t be any penalty.

Refinancing Your Mortgage

Refinancing your mortgage is another option to consider. While adding money back into your mortgage may not seem ideal, it might make sense if you have debt balances at higher interest rates. Refinancing could also provide the funds needed for many things, such as paying off other debts, or for household renovations allowing you to continue living in your home for years to come.

Exploring Your Options

Starting to explore your options four to six months in advance will give you lots of time to ensure you’re getting the most suitable mortgage in place. This involves researching different lenders, and comparing their offers. Reflecting on both your current and future plans is an important part of the process. By starting the process early, conducting thorough research, and considering all available options, you can make an informed decision that best suits your financial needs.

Seeking a Second Opinion

When you receive your renewal notice, the easiest thing to do is to sign it right away. However, rushing could mean missing out on a potentially better deal. Take your time to explore your options and make sure you’re getting the best possible deal. If you’re unsure about your renewal offer, don’t hesitate to seek a second opinion. Consulting with a mortgage broker can provide valuable insights and help you understand whether the offer aligns with your financial goals.

Consult With a Mortgage Professional

One of the first steps in the mortgage renewal process is to consult with a mortgage broker. Their services are typically free and they can guide you through the renewal process, ensuring you secure the best deal without the hassle. They will review your current renewal offer and let you know if it truly is the best option that it is in the market at the moment, or if there are any better deals available from different lenders. They will do a thorough research and shop around to see what different lenders are offering. This can involve comparing interest rates, terms, and conditions from various lenders.

Locking in Rates

Consider the renewal rate offered by your current lender, and how does it compare to the rates available form other lenders. These rates can vary based on several factors, including the lender, the term, the type of mortgage, and the overall economic climate. A small difference in rates can add up to thousand of dollars over the term of your mortgage.

Did you know that rates can be locked in up to 120 days prior to renewal? This means you can secure a favourable rate four months before your mortgage term ends. This not only provides certainty about your future mortgage payments but also protects you against potential rate increases. A mortgage broker can assist you with this rate lock.

Conclusion

In conclusion, mortgage renewal is a significant financial decision that requires careful consideration. While many homeowners in Ontario choose to renew early with their bank, it’s important to explore all available options to ensure you’re getting the best deal possible. With the changing mortgage environment, being informed and prepared can help you navigate the mortgage renewal process more effectively. Whether you choose to renew with your current lender, pay off your mortgage, transfer to another lender, or refinance, each option has its own set of advantages and considerations. Renewing your mortgage soon? Don’t let payment shock catch you off guard. If your mortgage is due to mature in the next four to six months, now is a good time to start exploring these options. As always, it’s recommended to consult with a mortgage professional for more detailed information.

We at TheBroker.ca Ltd, can offer you more helpful advice on renewals, mortgage rates and can review your current renewal offer to see if we can help you find a better deal from another lender. Ready to get a better deal on your mortgage renewal? Contact us today for a free consultation! For any questions or further assistance, feel free to reach out to us at TheBroker.ca Ltd. via our website or call us at (519) 252-9665.

This article was brought to you by TheBroker.ca Ltd., a licensed mortgage brokerage. Our licensing status with the Financial Services Regulatory Authority of Ontario (FSRA) can be confirmed through this link.

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