5 tips for mortgage renewal time

5 tips for mortgage renewal time

Knowing the date your mortgage term comes up is important as it gives you the opportunity to prepare for the best renewal rate possible and not get unexpectedly trapped by your current lender. You would hope after years of loyalty, your current lender will offer you a lower rate on your mortgage renewal, but this is not always the case. Because of this, keep a tab on your mortgage maturity or renewal date and start planning far ahead. Below we highlight 5 tips for mortgage renewal time to help you make an informed decision on your renewal.

1. Evaluate your Financial Goals

Before you decide whether to sign a mortgage renewal, take the time to examine your current financial situation and goals. Your finances have undoubtedly changed since you last applied for a mortgage.  Consider your current financial status, as well as if there are plans to move in the near future, is it beneficial to access some of the equity in your home? Are there other reputable lenders offering lower rates? You should consider all these before affixing your signature to mortgage renewal papers.

2. Search for Better Providers Early

Several months prior to your mortgage maturity or renewal, you should start shopping for better rates especially if your current lender is not committing to a lower rate off the bat. Although you cannot change your provider until the mortgage matures, you can still find a better product or provider that will give you a better rate and have it locked in. There is no harm in contacting a mortgage broker for advice and assistance in finding the best product to switch to. Finding a better lender early will allow you to have the paperwork ready for a hassle-free switch.

3. Negotiate a Better Mortgage Rate

Negotiating a better rate when renewing your mortgage is not always fun, but is necessary when trying to secure the best rate for your renewal. A slight reduction in your mortgage rate has a significant impact on the amount payable per year, which directly affects your financial status. Your lender may present diverse rates and figures to make you renew the mortgage with them; these might not be the lowest rates they offer, negotiate. So, if you start negotiating early, you can decide to switch your lender, if you are not offered a favourable rate. 

4. Use a Mortgage Broker

The best way to get the best product at the best rate is to work with a broker. Mortgage brokers are privy to information about lenders and rates they offer. They can examine your credit report and present you with a list of lenders that can work with your credit score and still provide the best rates possible. This will also help make switching lenders easy.

5. Understand the Terms 

Before you sign any papers, you should make sure you fully understand the terms of your mortgage. Look at how much your payments re and how much of your payment will go toward principal versus interest. Do you have the ability to pay your mortgage off early without any fees? 

When it comes to a mortgage renewal you need to be prepared. Do not renew your mortgage without asking for lower rates or searching for better offers from other lenders. Although it may be faster and more convenient to renew your mortgage with your current lender, not exploring the possibility of getting a better rate elsewhere can end up costing you thousands of dollars.