Frequently Asked Questions
When should I consider renewing my mortgage?
You should consider renewing your mortgage when your current term is nearing its expiration date, typically within the last 120 days of your term. This allows you to explore new interest rates from various lenders. It’s a crucial time to review your financial goals, assess your current contract, and consult with me to determine the best option for your situation.
What happens at the end of my current mortgage term?
At the end of your current mortgage term, several options become available. You can choose to renew your mortgage with your existing lender or explore refinancing opportunities with different ones—a mortgage broker can help you decide. This is a critical time to reassess your financial goals, evaluate your current interest rate, and potentially negotiate better terms.
Can I switch lenders at mortgage renewal?
Yes, it’s possible to move your mortgage to another lender at renewal. However, it’s not guaranteed they’ll have better terms and conditions. When your current term ends, you can shop around and explore your options. While there are typically no costs associated with switching lenders at renewal, keep in mind that there may be penalties for breaking the mortgage before the renewal date.
What are the potential benefits of mortgage renewal?
Mortgage renewals offer several benefits:
- If rates are lower at renewal, you can secure a new interest rate, potentially saving money on your mortgage payments. Keep in mind that the opposite is true if you renew in a higher-rate environment.
- You can adjust the term length or amortization period to better align with your financial goals.
- You can switch lenders to access better terms or new features.
- You can reevaluate your mortgage in light of changing financial circumstances.
What documents are required for the mortgage renewal process?
The documents required for the mortgage renewal process may vary by lender and your individual circumstances. Typically, you’ll need to provide proof of income, a statement of your existing mortgage, and information about any outstanding debts or assets. Lenders may also request credit reports.
Is it possible to make changes to the mortgage during renewal?
Yes, it’s possible to make changes to your mortgage during renewal. These changes can include adjusting the interest rate, term length or even switching from a fixed-rate to a variable-rate mortgage, and vice versa. You can also consider making additional payments and altering the amortization period.
How is the interest rate determined during mortgage renewal?
Several factors determine the interest rate during mortgage renewal. The most significant influence is the current economic conditions, including the market interest rates set by the Bank of Canada. Your lender may also consider your credit score, financial stability, and the terms of your existing mortgage.
What are the potential costs associated with mortgage renewal?
There are typically no costs associated with mortgage renewal as long as the changes are made at your renewal date. If you decide to switch lenders, however, there may be a fee to discharge the mortgage from your existing lender.
Can I pay off my mortgage early during the renewal term?
When you’re mortgage is in a fixed contract, you can typically pay off an extra 15 to 20% per year without a penalty. If you switch lenders, the same is true. If you renew into an open mortgage, you can pay your entire mortgage off without a penalty.
What happens if I miss the mortgage renewal deadline?
If you miss the renewal deadline, many lenders will renew it to a six-month mortgage at a higher interest rate. If you switch lenders during those six months, there would be a penalty. But if you change mortgage products with that same lender during those six months, there typically wouldn’t be a penalty. If you want to switch lenders, you’ll have to wait for the six months to lapse to avoid a fee.
How can I negotiate better terms during mortgage renewal?
Negotiating better terms involves a few steps. Start by researching current interest rates and mortgage offers from various lenders. You can take this information to your current lender and express your intention to explore other options. This can often lead to a more competitive offer. Additionally, having strong credit and financial stability can improve your bargaining position. Keep in mind that when you work with me as your mortgage broker, I can negotiate these better terms on your behalf.
Is mortgage insurance required during renewal?
Mortgage insurance is typically not required during renewal if you’ve already gone through the initial approval process and obtained the necessary insurance. Mortgage insurance is generally mandatory for high-ratio mortgages where the down payment is less than 20% of the property’s value. Renewal involves renegotiating the terms of your existing mortgage, so if you’ve already met the insurance requirements, it doesn’t need to be reevaluated.
Can I renew my mortgage if my financial situation has changed?
Yes. In fact, mortgage renewal is an excellent opportunity to reevaluate your mortgage terms with your new financial situation in mind. If your income has decreased, for example, you can discuss different options with your current lender. Keep in mind that if you want to switch lenders, you’ll have to re-qualify. So, a negative change in your financial situation may make re-qualification more complicated than a positive change.
Should I consider refinancing instead of renewing my mortgage?
Refinancing involves replacing your existing mortgage with a new one, often with different terms or lenders. This can be a wise choice if you need to access home equity. Renewing, on the other hand, is an update to your contract, potentially with the same lender. However, you can also transfer your agreement to a new lender with better terms. This option is beneficial if you want to maintain the existing loan structure and don’t want to borrow more money.