What to expect during a Mortgage Renewal?
When you are applying for a mortgage on your house, chances are you are not thinking about renewing it but rather how can you quickly move through the process and get it approved. Like most Canadians you would probably want to pay your mortgage within the stipulated time and take complete ownership of your house. However, this may not be possible as life may alter your financial plans, so creating and having a mortgage renewal plans in place makes the most sense. A mortgage renewal plan can look at renewing the contract for an extended-term so you can pay back your balance mortgage amount and also assess future financial goals. Creating a mortgage renewal plan is a very easy process and Brampton Mortgage Broker can help you with obtaining a successful mortgage renewal process. Our team of professional mortgage brokers can help you with all details of the process. Just give us a call and discuss your requirements with us.
What is mortgage renewal?
A mortgage renewal is simply an extension to your current mortgage with the current lender. At the end of your mortgage term, if you have an outstanding mortgage balance remaining you will need to pay it off, a mortgage renewal allows you to extend the contract term and gives you the option to pay off the balance amount at the end of the new renewal date.
So if you are opting to sign a mortgage renewal form, let us tell you that it is an excellent opportunity for you to renegotiate the terms of the contract with the current lender. This can mean that you can negotiate your premium interest rates, the term period and much more while renewing your mortgage.
Also, if you have some plans in the future which would require some funds, you can also look at a mortgage refinance so you can gain access to the money you require. It gives you the flexibility to pay off your mortgage the best way you can without facing any financial constraints. Also, if you are planning to switch lenders, this is the perfect to time to exercise that option, as the renewal date allows you to switch lenders with incurring any hefty penalty and other lenders may be able to offer you more favourable rates and terms than the current lender you are with. It is always best to check with our team to see if switching lenders at the renewal date is really the best option for you.
The mortgage renewal statement
At the end of your present contract, your mortgage lender will send you the mortgage renewal offer in the mail. This generally happens around 21 days before the end of the term or even a few months prior. The renewal statement will have the same type of information that is in your present mortgage agreement.
- The balance amount at the renewal date
- The interest rate
- Payment frequency
- The term
- Charges that may apply
The mortgage renewal offer would also mention that the interest rate offered in the renewal statement only be in effect after the current term is over.
Consider them carefully before acknowledging it and signing off on the dotted line. If you have any queries, feel free to contact Brampton Mortgage Broker. We will be more than glad to resolve them.
What should you consider before applying for mortgage renewal?
It is always better to think a bit about your future financial plans before you apply for mortgage renewal. Of course, renewing the mortgage contract does mean that you won’t have to run around looking for a new mortgage broker or lender and supply the documents all over again. Although this may does sound like an easy choice, however at the same time, you will be paying the same premiums where you could’ve paid less. Here’s a list of things to consider before you sign off on your mortgage renewal.
- Do you think that you can completely pay back your mortgage by the end of the term?
If you think you can then consider pre-payment penalties that go with variable and fixes rate mortgage rates
- Do you have the budget to increase your mortgage payments?
If yes, the review monthly pre-payment options in terms and conditions
- Will you be receiving any bonuses or inheritances which you can contribute towards the mortgage?
If yes, have a look at lump sum pre-payment options
- Are you happy with your present mortgage lender?
If not, then look for better options in the market where you can find better interest rates
- Would you be selling or moving home in the next 5 years?
If you are planning to do so, then consider a portable new mortgage plan.
Think about mortgage insurance as well
If you’re sticking with your current mortgage lender, think about mortgage insurance if you don’t have it already. Mortgage insurance safeguards you from penalty payments if you are not able to pay your monthly premiums. If you are facing a financial crisis, the insurance company will pay the mortgage premium on your behalf. Mortgage insurance can also play a role in lowering the premium interest rate and extending the amortization period.
Early mortgage renewal options
Some mortgage plans come with an early renewal option. The benefit to you is that you are locked at a certain interest rate for monthly premiums till the end of a term and you are safeguarded from rate increases. Also you may be able terminate your mortgage contract beforehand if you are not happy with the lender.
Make sure to carefully consider all aspects of your mortgage renewal and make sure you are prepared before you sign on the dotted line. For further details, contact Brampton Mortgage Broker.