2018: The Year of Mortgage Renewals
Are you renewing your mortgage before the end of this year? If so, you are among almost 50% of Canadian borrowers who are renewing their mortgage in 2018. Today’s reality of renewing a mortgage is completely different than the one five years back. Higher rates are just half of the story. In January of 2018, new mortgage rules came into the picture, making it harder to shop for a better rate and renew your mortgage elsewhere if you don’t like the one offered by your current lender.
“What if I just want to renew my mortgage as is?”
If you are coming to the end of your mortgage term and all you want is to renew your mortgage and improve your bank’s offer, we can get you the best products offered by 40+ lenders.
By law, your current lender must send you a mortgage renewal statement at least 21 days before your term is up. Unfortunately, 70% of borrowers will take the renewal as-is, despite the fact that in most cases it isn’t the best that their lender could offer them. It’s advisable to keep your bank’s mortgage offer open as a backup plan while shopping with a mortgage broker for a better one.
Although switching to a different bank or financial institution does require some paperwork, it will give you access to better mortgage plans that can save you more than $10,000 over the course of five years. Those with a good household income, full-time permanent work positions, strong credit scores, and no new debts will have an easier switch. A straightforward renewal allows you to maintain the same mortgage amount and amortization (a mortgage’s lifespan) while guaranteeing the best rates and terms. In this case, no fees to you are involved.
“What if I want to do much more than renewing my mortgage?”
One can be happy with just switching to a new lender while optimizing their terms. Alternatively, you may look at the renewal date as an opportunity to achieve your financial goals. Mortgage renewal is the cheapest point of time for you to access your equity while improving the terms, as you don’t have to pay any penalty.
It may have been five years since you last assessed your goals and adjusted your mortgage accordingly. Mortgage renewal is the right time to update your long-term goals. During the last years your property may have gone up in value, you may have received a nice raise at work, have had a new baby, may wish to move to another city, want to buy another property, or support your child’s plans to go to post-secondary schooling. All of that, and more should be factored into your mortgage features. It’s the right time to set a new life plan and use your mortgage renewal to finance it.
“What if my bank doesn’t let me renew the mortgage with them?”
In most cases, your bank will gladly keep you as a client and renew your mortgage despite changes to income or other parameters. The only disadvantage for you is that you’ll be limited to dealing with only your current lender. The rare times that the lender won’t be willing to renew your mortgage are when mortgage payments were not sent on time, credit score went below the red line and other unique situations. Our 15 years of experience shows that this is very rare. Even in these tough situations, there are other mortgage alternatives.
Mortgage Renewal is the perfect opportunity to be proactive, plan ahead and make sure you secure the best you can have for the next five years.