Mortgage renewals are a great time to think about your mortgage strategy. Should you switch the balance to a new lender and get a lower interest rate or a mortgage with better terms? Is now a time to pull some funds out for any other reason that you may have. Many lenders will allow you to lock in rates for up to four months before your mortgage renewal date. This is the best time that you should start thinking about your options and ask a mortgage broker to shop around for you.
Most people receive a mortgage renewal offer in the mail and don't think twice about it. Banks hope you are lazy and often don’t offer the best rate up front, or ask you about any other options that might help you. Think about your long-term financial goals and how your mortgage strategy fits into them. A lower rate can help you pay it off faster, especially if you keep your payments the same. You can also use this time to tap into some of the equity in your home, for example if you wanted to do some renovations.
The best idea is to sit down with a mortgage broker and work out your mortgage needs. Here are some questions to ask:
A good talk about the above with a mortgage broker can help you decide which path is best for you to take when it comes to your mortgage renewal. Your mortgage broker may have different rate and term suggestions depending on your answers to the above questions. If you need to save money on monthly payments, they can help you find lenders that can offer you lower rates and better terms.
Interest rates could be substantially lower than when you took on your mortgage, or maybe your credit may have significantly improved! You can use this to your advantage to cut payments by a noticeable amount, and this would make refinancing with a new lender a great option for you. If all you need to do is transfer the balance to a new lender at a lower rate, the new lender will also cover the costs of putting their name on title and an appraisal if needed.
When it comes to mortgage renewals, don't just ignore the renewal offer. You could save enough money by switching lenders to take an extra vacation this year. It is totally free to ask questions, so make use of your local mortgage broker and save some money when your renewal comes up again!