Credit / Debts / Documents / Income / Lenders / Mortgage Renewal / Qualifying / Rates & Terms

Should I renew my mortgage early?

The quick answer is, it depends on why. If you plan on staying with the same lender and you’re worried rates will be higher when your actual renewal date is here, then yes- renew your mortgage early. BUT, before you do that, ensure you’re aware of the other options available to you. Not shopping around for your mortgage can cost you thousands of dollars!

Here are 4 points to consider when deciding if an early mortgage renewal with the same lender is the best solution to your financing needs;

  1. Is there a lower interest rate available than what’s being offered by your current mortgage lender?
  2. Has your financial situation changed?
  3. Has your credit improved since you got your last mortgage?
  4. Do you have personal debt you would like to pay off?

Keep reading for how your answers to the above 4 questions will affect which option is better; stay where you are and renew, or pursue other options.

Is there a lower interest rate available? 

While it’s not all about rate, it is important because it affects your mortgage payment amount. The lower the rate, the lower the mortgage payment. Most lenders know that signing a renewal letter with them is easier than moving to a new mortgage lender and having to qualify again and supply supporting documents. As a result of this, they don’t always offer their lowest rates come renewal time. Don’t throw away your money by not doing your research; call an independent mortgage broker to get unbiased information on other options and what’s involved to take advantage of those opportunities.

Has your financial situation changed?

If you find a better deal and want to move to a different mortgage lender, you will have to qualify again. As this new lender has no history with you, they will confirm the mortgage they’re about to give you is affordable and you will repay it on time. That means a credit/debt level check and income document requirements. This can be important if you’ve changed employment, especially If you’ve gone from an employee to self-employed as lender requirements are different for each.

Has your credit improved since you got your last mortgage?

If you had to go with an alternative lender to get your mortgage initially, you may be paying a higher rate than necessary. If your credit has improved, you may qualify for best rates. You will have to provide income documentation to the new lender, but it could still be worth it to move.

Do you have personal debt you would like to pay off?

Simply renewing your mortgage keeps the mortgage balance the same. If you have equity available in your home, refinancing your mortgage to pay off your personal debt could be the solution you’re looking for. It does involve qualifying for the higher mortgage amount, though the monthly savings are nothing but a benefit.

Now for the other side of the coin; there are certain scenarios where it is not possible to move your mortgage to a different lender at renewal time. Here are a couple of situations when it is a good idea to renew with your current lender;

  • Your financial or credit profile has changed and you may not qualify with a new lender
  • You don’t want to shop around, you just want to sign on the dotted line and be done for another 1-10 year term, or until you decide to refinance

If you have to stay with your current lender, don’t be afraid to negotiate!

For all your mortgage needs, contact Jackie at 780.433.8412 or info@mortgagegirl.ca. No obligation and no cost- just unbiased advice with 30 years of experience behind it! Stay in the loop my following on Twitter @Mortgagegirlca.

 

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