You will almost certainly renew your mortgage a number of times over the course of owning your home and there are a lot of things to consider.
When your mortgage comes up for renewal most banks will issue you an early renewal notice and that’s a good time to start assessing not only what they are offering you but also what your needs and goals are.
At the end of your mortgage term, so long as you still owe a balance, you will need to renew your mortgage for another term. And with each mortgage renewal comes the opportunity to assess your current mortgage and compare it to any new financial goals you may have. Your current mortgage provider will send you a renewal slip in the mail that you could easily sign and send back, but if you want to ensure all of your needs are met, we suggest taking this proactive approach with your next mortgage renewal:
Mark your current mortgage term’s maturity date on the calendar, then count back 120 days (~4 months) and mark that too; this is the date most lenders will let you start the early mortgage renewal process, meaning you could renew early with your current lender without having to pay a prepayment penalty (for breaking your term early). If you’re not ready to sit down with your mortgage broker or lender on this day, you can at least start researching your options online. By finding out which lenders are offering what, in terms of mortgage rates, prepayment options and other terms and conditions, you’ll be better armed to negotiate when you are ready to renew.
Let’s face it: a lot can happen throughout your current mortgage term. Your financial goals at the beginning of your current mortgage term may no longer match up with your goals today. You could have received a substantial raise at work, lost some income or even retired. You may have had a baby, or need to pay for your child’s university tuition. If there’s any chance you’ll need to move in the next 5 years that should be factored into your decision. Or if you think you want to access some equity, you should be mindful of that too. Whatever your needs are, make sure you consider them when choosing a mortgage rate, term and product.
Along with your other financial goals, you should make a list of what you’re looking for in a mortgage product. To start, ask yourself a few questions:
By law, your current lender has to send you a mortgage renewal statement at least 21 days before your term is up, but they will usually mail you a renewal offer for their lowest posted rate that is good for the 30 days before maturity. By extending that offer for 30 days, you’re protected from any potential rate increases during that time. However, you should have done enough research by now to know whether or not it’s actually the best mortgage rate on the market – and if not, you’re perfectly within your right to try to negotiate. However, even if you sit down with your current lender to negotiate their offer, it’s unlikely they’ll be able to give you the best mortgage rate. So, in your last 30 days, you should also make an appointment with a mortgage broker, to discuss what other lenders can offer you.
After shopping around, considering your financial goals, outlining your mortgage needs and receiving a mortgage renewal offer from your current lender, it’s finally time to make a decision. The last question you’ll need to ask yourself is who is offering you the best mortgage rate and product: your current lender or another lender? If you decide to stay with your current lender, you can either choose to sign and return the mortgage renewal offer they sent in the mail, or sit down and try to negotiate a better offer in their offices.
Switching providers will require a little more paperwork, but you’ll find that doing so will give you access to better mortgage rates. Just be prepared to submit a mortgage application, as the new lender’s qualifying criteria might be different from that of your current lenders. There may also be fees involved with making the switch, including an appraisal fee to verify your property’s value ($150-$500), a discharge fee ($5-$395), an assignment fee ($25-$300) and legal fees (up to $1,500). Certain mortgage brokers and lenders will offer to pay for some or all of these fees when you bring your mortgage to them, but others won’t so you should be prepared to pay for them with cash.
If you’re ready to start the mortgage renewal process today, a mortgage broker can help you find the best mortgage rate, term and product for you.
Talk to a Mortgage Broker
300,000 people a month trust us for mortgage information before buying a home. Join the monthly newsletter for financial tips, news, and deals!