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.
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