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 make 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 should be 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 it compares 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.
At TheBroker.ca Ltd, we understand what needs to be done to secure a mortgage. We can help identify lenders that best match your credit profile. Talk to us. We can offer you helpful advice on getting a mortgage, understanding current mortgage rates, and guide you through the process that will help you make informed decisions that align with your financial goals.
About Us
At TheBroker.ca Ltd, we are constantly looking for ways to provide helpful advice related to mortgages, current mortgage rates, and more. If you have any questions or need further assistance, we offer a complimentary no-obligation consultation. Feel free to reach out to us at (519) 252-9665 during our regular business hours. Alternatively, you can fill out our contact form, and your message will be promptly emailed to us. We value your time and inquiries, and we make it our priority to respond to all messages within one business day. When reaching out, please provide us with your contact details, a brief overview of your mortgage needs, and the most convenient times for you to have a consultation. We look forward to assisting you with your mortgage.
This article was brought to you by TheBroker.ca Ltd., a mortgage brokerage that is licensed with the Financial Services Regulatory Agency of Ontario (FSRA), which regulates businesses in the financial sector. The Principal Broker Sash Trajkovski has over 20 years of real estate and mortgage experience in the Ontario marketplace. You can verify our licenses by visiting the following links from FSRA’s website: our corporate license and Principal Broker license. Our mortgages services are available to all residents of Ontario. If you’re in Ontario and looking for more personalized advice and information, consider booking your Complimentary Consultation today, and let us help you understand the details that will guide you on your path to a suitable mortgage solution.
Disclaimer: Please note that this information is current as of the date of publication and is intended to be general in nature. It is not intended to provide legal, tax, financial, or other professional advice and should not be relied upon as such. Always consult with a professional for advice tailored to your individual circumstances.
