Broker vs. Bank / Credit / Documents / Insurance / Lenders / Mortgage Renewal / Qualifying / Quizzes / Rates & Terms / Refinance

What should you do when your mortgage renews?

TAKE THE QUIZ NOW

If your mortgage term is ending in the near future, this quiz is for you. You have multiple options come mortgage renewal time and the below questions will provide some direction if you’re undecided on which route to take?

1. Is your mortgage up for renewal within the next 6 months?

A) Yes

B) No

C) Maybe

If you’re not sure, you can contact your current lender to find out what your exact renewal date is. If you want to make changes to your mortgage before your term ends, it is possible, though you may have to pay a payout penalty to get out early.

2. Has your existing lender contacted you with mortgage renewal rate offerings?

A) Yes

B) No

C) Maybe

Your existing mortgage lender will usually send you an offer to renew near the end of your mortgage term, or perhaps sooner as some will offer early renewal options. This document will contain the different mortgage term rate offerings for you to choose from. The benefit of renewing with your existing lender is minimal paperwork is required as most often you are not required to re-qualify for the mortgage and there’s usually no costs involved unless your lender is charging you a renewal fee. This is ideal if you just want to sign on the dotted line though the downside is you may not have initially been offered the best rate available.

3. Have you shopped around for interest rates?

A) Yes

B) No

C) Maybe

Often the rates are negotiable and you need to be aware you don’t get what you don’t ask for. However, before having the rate talk with your current lender, do some research first to determine what exactly the “best rates” are. Further to that, if those “best rates” also come with any restrictions.

4. Did you find a better deal with a different lender?

A) Yes

B) No

C) Maybe

If you’ve found a better option than your current lender is offering and they’re not willing to match it, you may want to look at the possibility of renegotiating your mortgage with a different lender. If you’re going to look at this option, be prepared to provide updated mortgage application details as well as supporting documentation to your new mortgage lender. As you don’t have a mortgage repayment history with this new lender, they will require you to qualify which includes pulling a current credit report. Costs are usually minimal to move your mortgage terms ‘as is’ to a new lender, around the $200 -$300 mark, which would be an administration fee charged by your current lender to leave them. If you’re making a change to your mortgage amount or amortization, it is now considered a refinance which could involve a few extra costs with the exact amounts depending on your new lenders product offerings.

5. Has there been a positive change in your financial position since obtaining your last mortgage?

A) Yes

B) No

C) Maybe

A lot can change during the term of your mortgage including income, assets, debts and overall financial profile It’s never a bad idea to give your mortgage a check-up at renewal time to ensure it aligns with the financial goals you are trying to achieve.

6. Do you want to make a change to your mortgage amount or amortization?

A) Yes

B) No

C) Maybe

Changing your mortgage amortization could increase or decrease your mortgage payments depending on if you extend or shorten it. If you want to increase your mortgage amount at renewal time, you will have to renegotiate with your existing lender or refinance with a new lender.

7. Could you use some extra cash right now for debt reduction or buying a rental property?

A) Yes

B) No

C) Maybe

A refinance is perfect for you if you want to access your home equity at renewal time.  Refinancing your mortgage allows you to restructure your mortgage amount, term, interest rate and amortization. If you have sufficient equity available this can allow you to pay off debt, invest or renovate. There are some costs related to refinancing your mortgage and these may include an appraisal fee and mortgage registration fees which usually aren’t as high as what you paid when you originally purchased the home.

8. Do you know the 3 options you have to access your home equity?

A) Yes

B) No

C) Maybe

You can restructure your first mortgage to increase your mortgage amount or you can look at adding a home equity line of credit secured by your home in addition to your first mortgage as a cost efficient way to access equity for a variety of uses. Lastly, you can look at a second mortgage; just make sure you’ve checked if it’s actually cost effective and the best route to go.

Mostly A’s, B’s & C’s

Regardless of what your answers were to this quick quiz, it is never a bad idea to explore your options at mortgage renewal time. Be advised, if you ignore your renewal date with no communication with your existing lender, they may automatically renew you. This could be into the same term you previously had at posted rates or into an open term at a very high interest rate. Don’t leave your renewal to the last minute, make it a priority if you want to maximize your mortgage benefits.  Don’t be afraid to contact a mortgage professional to inquire about what products are available to you as a lot has changed in the past 5 years.

For all of your mortgage needs, contact the Mortgagegirl at 780.433.8412 or info@mortgagegirl.ca. Stay in the loop by following on Twitter @mortgagegirlca.

Advertisements

One thought on “What should you do when your mortgage renews?

  1. Pingback: Mortgage mistakes you don’t want to make in 2016 |

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s