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Mortgage Renewal Guide

mortgage renewal guide

How Does a Mortgage Renewal Work in Canada?

While there isn’t really a mortgage renewal guide per say, we have a lot of experience in this department.  Once your mortgage term ends your bank will almost certainly give you the opportunity to renew.  At this time you can choose to accept this renewal offer or shop around.

This is where many homeowners make a big mistake. They accept the offer to renew their mortgage without shopping around.  Most banks are aware of this. So they offer higher rates and less flexible terms with the hopes that most clients will just sign the mortgage renewal they are offered.

With this in mind, don’t sign your renewal agreement! In fact, the first thing  you should do when you approach your mortgage’s maturity is to shop around. You should start the process 90-120 days before your mortgage comes to maturity. 

You will almost certainly renew your mortgage a number of times over the course of owning your home. Notably there are a lot of things to consider when your mortgage matures not just the rate.  You need to consider if you want a fixed rate mortgage, a variable rate mortgage or perhaps you should consider refinancing.

For this reason, it’s a good time to start assessing what they are offering. But it’s also important to look at if what they are offering makes sense for your needs. There are few things to consider before you renew your mortgage and we’ve helped outline them below to help make the process easier.

Should I Renew My Mortgage Now?

A lot of people aren’t sure when they should renew their mortgage.  In a perfect world, people would simply renew their mortgage when it matures.  That being said, it isn’t always ideal to wait.  you may have extensive debt that you could consolidate.  Perhaps rates are on the rise and you want to lock in before the get to high.

When you should renew your mortgage, ultimately depends on your financial situation. There will be times in your life when you have financial ups and downs and your original mortgage plans may need to be revised. Everyone that owns a home has the goal to be mortgage free one day. And as such, many people use renewal time to suit their current financial situation.

Maybe your current financial situation plans are to help a child out with a wedding or tuition or you are nearing retirement. Either way there are lots of reasons you may want to reduce your payments and just as many reasons to increase them. Perhaps you got a pay raise or had a windfall. The bottom line is that mortgages have renewal terms for a reason and you have to assess your financial situation to know what your needs are.

Can You Be Denied a Mortgage Renewal?

Sadly, the short answer is yes.  A mortgage lender is not obligated to renew your mortgage.  Therefore, it’s always wise to make sure that you keep your mortgage up to date and keep your lender happy.

If your lender decides not to renew you, it is your obligation to pay them out at maturity.  Otherwise, you risk losing your home to a power of sale or foreclosure. Notably, this is not the norm. Most lenders will offer you a renewal as long as you have been a good client.  Again, this doesn’t mean that they are offering you the best mortgage they can and that’s why we encourage everyone to shop around at renewal time.

Looking to Renew Your Mortgage in Canada?

If you are considering renewing your mortgage in Canada, there are lots of things to consider. Besides getting a low interest rate, there are a lot of other factors. Sometimes the best rate may not be the best mortgage for you, after you factor in all the conditions. 

For instance a lot of low rate mortgages are referred to as “no frills” mortgages. They are called this because borrowers are restricted from making additional pre-payments. They can also come with lofty penalties and even prohibit early repayment unless you are selling your home. So if you have no intention of refinancing during the term of the mortgage and don’t plan on making additional payments then a no frills mortgage might be right for you. 

There is a lot that you must consider when renewing your mortgage and it’s not just the rate. When you renew your mortgage is also something that must be answered.  Again, waiting until maturity isn’t always your best move.

When figuring out what you are looking for in a mortgage, some of the questions you will need to ask yourself are:

  • How much can you afford to pay?
  • Will you want to increase your monthly mortgage payment?
  • Is there a chance you will want to refinance prior to the mortgage maturing?
  • Do you plan on moving and would you want to port your mortgage?
  • Are you a gambler? Do you want a fixed rate or variable mortgage?
  • Do you need mortgage insurance?
  • Will you want to apply lump sum payments to the principal?

If you’re not sure how to answer these questions or you don’t know what you are looking for in a mortgage it is a wise choice to help a professional that can help you find a solution that works for you.

Renew My Mortgage – Signing your new renewal agreement

Again, you should never sign your renewal before you look into your options and have time to consider your finances and figure out what you are looking for in your mortgage. Often, a borrower can save or lose thousands of dollars over the course of the term of their mortgage. Make sure you spend the time to make sure you are getting the best deal possible. If you don’t have the time or know how to tackle such a big undertaking then you should get a professional on your side that can help.

Mortgage Brokers Network has decades of experience and knows how to work with clients to make sure that they get not only the best deal but one that works for you and is flexible enough to meet your needs. If you’re not sure where to start the process just pick up the phone and call us toll free 1-877-383-1577 or simply fill out our contact request form and we will have a renewal specialist contact you right away

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