Mortgage Renewal

January 11, 2021

As the end of your mortgage term creeps upon you, you will need to renew it for another term. With each new term, you have the opportunity to evaluate your current mortgage and compare it to any other goals you may have. You will receive a renewal slip in the mail and it can be as easy as checking a box saying nothing has changed or asking to have a meeting.

When the time comes to renew your mortgage, keep in mind the following:

  • Start shopping 4 months before the end of the term. You will get a notice saying that your mortgage is up for renewal around 4 months before your mortgage term is over. This is the early renewal process that is offered to clients so that there are no penalties. If you are not ready to talk to a lender, this is a good time to start your research. Knowing what lenders are offering (mortgage rates, prepayment, and other terms) will allow you to have the ability to negotiate.
  • Consider financial goals. Take into consideration your financial status. You could have gotten a pay raise, lost income, or even retired. Have you recently had a baby, or do you have to pay for your child’s education; do you plan to move in the next 5 years; do you want to access some equity? Make sure you keep your needs in mind when you are choosing a mortgage rate, term, and product.
  • Outline your mortgage. Think and ask yourself the following questions:

    1. Does your monthly budget have room to increase your payment? If the answer is yes, look at the renew your monthly prepayment option.
    2. Do you think you will receive any bonuses/inheritances you could put towards your mortgage? If yes, then look at your lump sum prepayment option.
    3. Do you have the option to pay off your mortgage entirely? If yes, then look at the prepayment penalties with fixed vs variable rates.
    4. Will you want to borrow more money from your lender? If yes, then look at the prepayment penalties involved in refinance/collateral mortgages.
    5. Is there any chance you will be selling your home/moving in the next 5 years? If yes, then look at a probable/assumable mortgage.
  • Ready to renew in the last 30 days. Having your offer extended by 30 days allows you to be protected from any rate increases. From your research, you know that you are not being offered the best rate and therefore can use that to negotiate. Make sure to make an appointment to discuss what lenders are able to offer you.
  • Make a decision. After you have done your research, looking at your financialgoals, outlining your needs, and receiving an offer from your current lender, a decision is needed. The last question you need to ask yourself is which lender is giving you the best deal; your current lender or another one? If you decide you want to stay with your current lender, then you sign the mortgage renewal slip or sit down with them and try to negotiate. If you choose to go with another lender, a little more paperwork needs to be done. Be prepared for a mortgage application as the new lender may have different qualifying criteria than your current lender.

Keep these tips in mind the next time you have to renew your mortgage and you will be set!