Roughly 66% of the Canadian population must renew their Mortgage at the end of the Mortgage Renewal Term.

If you don’t have enough finances to pay the remaining balance at the end of the first term, you will have to renew your mortgage term.

Almost every mortgage needs to be renewed before it is paid fully.

Mortgage Renewal

Mortgage Renewal is the process of renewing the outstanding balance of your mortgage for another term.

With a mortgage renewal, your chances of negotiating the interest rate of the mortgage increase, but it is possible it fluctuates according to the latest market trends.

Your mortgage provider will send you a mail regarding the new mortgage terms at the end of your mortgage term if you don’t already know the date when your mortgage term is ending.

• This mail consists of a slip where your new mortgage terms will be provided that you can sign and resend if the conditions are suitable for you.

Current Market Trends

The Bank of Canada has risen the Overnight Lending Rate eight times from March 2022 till January 2023.

• This has led to an increase in the variable mortgage rate.
• The lowest variable mortgage interest rate that you can get in the current market is 5.55% as opposed to 0.9% in early January 2022.
• Even the fixed mortgage rate is suffering and is increasing considerably throughout the years.

It is certain that you will have to get through with these rates and will have to withstand a higher mortgage rate than you would have five years before.

Tips for Mortgage Renewal:

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Here are some tips and tricks that you can apply when applying for a mortgage renewal.

1. Financial Goals Consideration

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Reviewing your financial goals before signing your new mortgage renewal terms is necessary.

• You have to assure yourself that your current provider provides you with a mortgage rate and term that suits your financial goals.
• For example, if your service provider gives you a 4-year mortgage product, the service provider will likely give you another 4-year mortgage term at the time of mortgage renewal.
• If this is the case, consider whether you will live in that house for four years. If you are thinking of shifting to another home or city, you must decrease the term time to when you will be staying in the house.

If an extra pile of money shows up (From inheritance or other sources), you must know that it could affect the pre-payment options.

• You must also consider if refinancing your mortgage makes sense, or you can also opt for HELOC services to access equity.

Refinancing is best if you need to extend your amortization period to reduce your monthly mortgage payments.

Understanding your needs in a mortgage will help you consider the right mortgage lender and product that suits your financial goals.

2. Start Scooping for Mortgage Products and Lenders 120 days Before your Mortgage Renewal Date

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People might think they can only negotiate the new mortgage terms with their lenders at the time of mortgage renewal.

• However, this is not true, as you can search for better options or negotiate with your current lender 120 days before your maturity date.
• Your service provider is likely to send you the mortgage slip a month before your maturity date, but you can negotiate the terms much before.
• You must mark your calendar 120 days before your mortgage term expires.

If you cannot get a better deal from your current lender, you can search for other lenders and think of switching your lender with one that suits your financial needs and goals.

• You cannot switch your mortgage lender before the mortgage term ends, however, you can search for another lender because it will help the paperwork process, and he could search for a better financial product so you don’t scramble at the last moment.

3. The power of Rate Hold

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It is better to choose a mortgage broker than going from one lender to another in search of a better mortgage rate.

• A mortgage lender will check your credit report and provide different lenders that suit your financial needs.
• He can also tell you the mortgage rate you qualify for if you switch your mortgage lender.

Rate Hold can help you choose a fixed rate for up to 120 days if the mortgage rate increases during this duration.

Even if the mortgage rate decreases over this time, you can negotiate with your lender.

• It helps you in scenarios when the mortgage rate will increase during this tenure.

4. Switching Lenders

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If you plan on switching your current provider, you must start looking for plans as soon as possible.

• You must submit a mortgage application the same way when you applied for a new mortgage.

Documents that you require

1. Income Proof.
2. Proof that you are the owner of the home.
3. Property Insurance Proof.
4. Mortgage renewal letter copy

The general time for a mortgage application to get approved is a week. You must make sure to do this process as early as possible before your mortgage renewal date, as you might get stuck with the same lender.

Conclusion

The process of mortgage renewal is smooth with your current lender. However, if you want to negotiate the new terms or opt for a new lender, you must research well so that your new mortgage renewal term serves your financial goals.

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