Are you aware that at the end of your loan term, you can choose to renew your mortgage exactly as it was with the same terms and conditions? Well, it is the perfect opportunity to negotiate with your bank as well as your mortgage brokers to get the terms and conditions based on your current specific needs. It is normal for an individual’s financial situation to change over time. You must ensure that your mortgage also adapts to your new financial situation and requirements. This is where mortgage renewal comes in handy.
What is mortgage renewal?
When you purchase a new mortgage with a lender, your contract has a fixed term, this is called the mortgage term. The loan and interest rate are agreed upon and can vary anywhere between six months and ten years. At the end of the term, the borrower will need to renew their mortgage. You may need to renew it several times before paying your entire loan amount in full. If you have completely paid off your loan amount, there is no need for you to renew your mortgage. However, through mortgage renewal, the borrower has the option to customize their contract to suit their specific needs. From changing the length of the term to deciding if you want the interest rate to be fixed, this is the ideal time to determine if your loan terms are correct for you.
Evaluate your needs before renewal
Before you renew your mortgage, you must take the time to evaluate and analyze your financial needs and goals. Since the last time you negotiated with your lenders, your plans may have changed. Below mentioned are some of the questions you can ask yourself if your current mortgage rate and terms are ideal:
- How is your current financial situation? Has it improved or gotten worse in recent years?
- Are you satisfied with your repayment schedule? Does your budget allow it to pay your loan faster?
- Are you considering moving and need to sell your property?
- Do you require additional funds for any major renovations? Or are you looking to buy a second house?
- Are you happy with the services of your current lender?
When is the best time to renew your mortgage?
The best time to renew your mortgage is six months before the end of the contract because it gives the borrower plenty of time to negotiate and end up with a fair deal. Ensure your lender sends a renewal notice 21 days before the end of your term. It must contain the following:
- The reimbursed balance
- The current interest rate
- Length of the term
- Frequency of payments
- Fees applicable for renewal
The mortgage experts you can rely on
In addition to helping you choose the right mortgage when it comes to renewal, we also offer valuable advice that will help you make a well-informed decision during that period. To find out more information on mortgage renewal or more about our mortgage brokers, please do not hesitate to get in touch with our team at AKAL Mortgages Inc today to book an appointment.
Call Us Before You Renew Your Mortgage!
If you are reaching the end of your mortgage term – and you are not fortunate enough to be able to pay your entire mortgage off in full – you will have to renew your mortgage. Generally, as homeowners near the end of their mortgage terms, they will receive some form of communication from their lender letting them know that the time to renew is nearly here. But while this may seem like a no-fuss, no-muss option, it is rarely the best option. In fact, signing off on that offer to renew your mortgage before you consult with your mortgage broker could actually end up costing you thousands of dollars. This is because lenders know that most homeowners are going to sign the offer without shopping around first. So there is very little incentive for lenders to offer you their best interest rate on their offer renewal letters. When it is time to renew your mortgage, you should seek out the help of a professional mortgage broker like the ones at Akal Mortgages.
How can a mortgage broker help you at mortgage renewal time?
When it is time to renew your mortgage, it is always advised that you work with a mortgage broker rather than going straight to your lender. Here are a few ways that a mortgage broker can help you renew your mortgage.
Help you get the best interest rate.
As mentioned, your mortgage broker can help ensure that you get the best possible interest rate when you renew your mortgage. Because brokers work with dozens of lenders, they can shop around on your behalf. Even if you would like to renew with the same lender, chances are that your mortgage broker will be able to negotiate a better rate for you than the one on your mortgage renewal offer.
Change your type of mortgage.
When you get an offer to renew your mortgage from your lender, they will very likely assume that you want the same type of mortgage (i.e. fixed or variable) that you had before. But that isn’t always the case. If your financial situation has changed over the term of your mortgage, it may make sense to change the type of mortgage as well.Your mortgage broker can explain the different types of mortgages to you and make a recommendation based on your current situation.
Discuss other options.
Do you want to start paying your mortgage off faster? Do you need a mortgage that will let you reduce the amount you are currently paying? Your mortgage broker can discuss various amortization options and other mortgage features that might align with your goals. When you renew your mortgage, they can help you get the options that you need. Contact Akal Mortgages today! Is it time to renew your mortgage? Don’t sign anything before you talk to us! Call us today to speak to one of our brokers.
Why should you call us when it is time to renew your mortgage?
By far, the most common term for a mortgage in Canada is five years. After those five years are up, you will either have to pay the balance of your mortgage or you will have to renew your mortgage. And since very few people have the means to pay off their entire mortgage all at once, most choose to renew.
What happens at mortgage renewal time?
Usually, when your mortgage is coming due for renewal, your lender will send you a notice – about a month or so prior to renewal – that your mortgage renewal is imminent. The lender will generally also include a renewal offer with a new rate. If you choose to accept the offer, you simply sign and that is that. At mortgage renewal time, you’ll begin a new term (most likely another five years) with that lender.
Why you still need a mortgage broker when you renew your mortgage:
Now, the process for renewing your mortgage as described above sounds pretty simple – and it is. But it is almost never the best option when it is time to renew your mortgage. Lenders know that most people will simply accept the new renewal offer without question – and that gives them very little incentive to offer their best rate upfront.
Instead of simply accepting your lender’s offer, you should contact your mortgage broker. Here are a few ways that your mortgage broker can help you get a better deal when it is time to renew your mortgage:
- They can help you find a better interest rate by comparing different lenders.
- They can help you negotiate a better rate with your current lender should you wish to stay with them.
- If your credit has improved, they may be able to help you switch from a B lender to an A lender.
- They can help you determine whether you should switch from a fixed-rate mortgage to a variable-rate mortgage or vice versa.
- They can help you consolidate high-interest debt into your new mortgage if you wish.
While it is possible to renew your mortgage without a mortgage broker, doing so is almost never in your best interest. If your mortgage renewal is coming up, contact AKAL Mortgages today to learn about your options.
When we say YES! We stand behind our promise.®™