Mortgage Renewal
While most Canadians spend a lot of time, and expend a lot of effort, in shopping for an initial mortgage, the same is generally not the case when looking at mortgage term renewals.
By omitting proper consideration at the time of renewal, this practice costs Canadian citizens thousands of extra dollars every year.
Nearly 60% of borrowers simply sign and send back their renewal that is first offered to them by their lender without ever shopping around for a more favourable interest rate.
Changes to mortgage renewal rules
The federal government the strengthened Canadian Mortgage Charter¸ announced in Budget 2024, which allows all insured mortgage holders to switch lenders at renewal without being subject to another mortgage stress test. Not having to requalify when renewing with a different lender increases mortgage competition and enables more Canadians, with insured mortgages, to switch to the best, cheapest deal. For more info click here.
Homeowners should never accept the first rate offer from their existing lender.
Without any negotiation, simply signing up for the market rate on a renewal is unnecessarily costing the homeowner a lot of money on their mortgage.
Generally it is a good idea to start shopping for a new term between four and six months before your current mortgage term expires. Many lenders send out your renewal letter very close to the time that your term expires and this does not give you ample time to arrange for a mortgage term through a different lender. This means that you need to be tracking your own mortgage term timeframe and know when it is time to start shopping for a good mortgage renewal rate.
Before you ever hear from your lender about renewing your mortgage term, have a licensed mortgage professional shop around for you, you will be amazed at what they can accomplish on your behalf! When your mortgage was arranged by a mortgage professional, you will be contacted within 4 – 6 months of your renewal date in order to give enough time to investigate the best options for the next term of your mortgage.
Renewal time is the best time to consider your needs going forward. You might want to pay off some debts or do some renovations etc, a refinance coinciding with the maturity of your mortgage can save you thousands of dollars in early discharge penalties.
Your mortgage is one of your biggest expenses. For this reason it is imperative to find the best interest rates and mortgage terms you possibly can. By shopping around at renewal time you can save substantial amounts of money over the life of your mortgage loan. Don’t be one of the 60% who just simply sign their renewal letter and send it back. Use the services of a licensed mortgage professional to ensure the lenders compete for your business.
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