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Renewing your mortgage

When mortgage renewal time approaches, getting informed about your mortgage options rather than just re-signing on the dotted line can make a huge difference in your bottom line and save you money. Consider it a fresh start!

Exploring your mortgage options
Renewing the mortgage

What is mortgage renewal?

When the current term of your mortgage expires, you will need to either re-sign with your current lender for a new term, sign with a different lender or pay off your mortgage completely. In Canada, your lending institution must contact you in writing 21 days prior to the end of your term to let you know if it will not be renewing your mortgage or to offer you new terms, conditions and rates. However, the Financial Consumer Agency of Canada recommends that Canadians begin thinking about mortgage renewal about four months prior to the end of its term.

What are the options for renewal?

Your current lending institute will mail you mortgage renewal forms detailing the options available to you. Many Canadians simply select an option, sign the forms and send them back. However, it’s important to note that those options are not written in stone and can be negotiated based on your needs. You can ask for a better interest rate and higher or lower payments, switch the frequency of payments, change prepayment terms and consolidate debt. You can also change lending institutes completely.

What do I need to know?

Four months before your current mortgage term expires is the time to start doing your homework. If your mortgage needs have changed, make note of your new requirements. Get educated on what the current interest rates are, refresh your knowledge regarding the various mortgage options (flexible, variable, fixed-term) and contact other financial institutes to find out what they can offer. Should you not have the time to contact various lending institutes, an unbiased mortgage broker can be hired to find the best package to suit your mortgage needs.

Renewing your mortgage

Once you are armed with all the mortgage renewal information mentioned above, you can negotiate with your current lender and choose to renew your mortgage with it, or make the decision to move your mortgage to another financial institution. Should you opt to move your mortgage, it will be just like applying for a mortgage for the first time, and consequently fees, such as legal and administration costs, will almost certainly be incurred. In some cases the new lending institute will agree to pay these fees.

Whether you decide to stay with your current lending institute or to switch to a new lender, you will now be able to renew your mortgage secure in the knowledge that you have made the best, most informed choice for your financial and mortgage needs. Congratulations!

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