Mortgage Renewal Process
At the end of the mortgage term, the borrower is required to renew their mortgage for another term unless there is no longer a balance owing. During this process it is important that the borrowers access their current mortgage and how it reflects their financial goals. As the renewal date approaches, the financial institution that holds the current mortgage will send the borrowers a renewal slip that can be signed and sent back to the lender. However, to ensure your needs are met and that you are getting the best rates available, we suggest taking a proactive approach by following the sets listed below.
1. Contact us 4 months before your term is up
Most lenders allow the borrower to start the mortgage renewal process early. What this means is that the borrower, in some cases can, renew early with their current lender without being subject to a prepayment penalty for breaking the term of the mortgage early.
Before signing your renewal, contact us four months prior to the end of your term. We will review your current offer from the current provider and compare that offer to what our other lenders are offering to ensure our clients are in the most suitable mortgage.
2. Consider your financial goals
Financial goals at the start of a mortgage term may not line up with the clients goals at the end of the term. A lot can change over the course of a client’s mortgage term (increased or decreased income, retirement, a growing family etc). Another factor to consider is whether or not the client intends on moving in the next 5 years. Whatever the clients need may be, we encourage all of our clients to consider them before choosing a mortgage rate, term, and product.
3. Outline your mortgage needs
In addition to considering financial goals, list what you are looking for in a mortgage. Here are a few questions that should be asked:
- Is there room in the monthly budget to increase the monthly mortgage payment amount?
- Will you receive bonuses or inheritances that you would like to have the option to put towards your mortgage? If so, it is important to consider a mortgage with prepayment options.
- Is there a chance that you will have the option to pay off the mortgage in its entirety throughout the term of the mortgage? If so, consider the prepayment penalties on a variable mortgage vs. a fixed-rate mortgage.
- Is it possible that you will be selling your property in the next 5 years? If so, a portable or assumable mortgage may be the best option for you.
4. Be ready to renew in the last 30 days
By law, the borrower’s current lender has to send you a mortgage renewal at least 21 days prior to the term’s maturity date. The lender they usually mail a renewal offer with their lowest posted rate which is good for 30 days before maturity. This protects the client from any potential rate increases during that time. If you have not done so already, it is at this time that you should contact us to ensure that the offered rate, is in fact, the best mortgage rate on the market.
5. Make a decision
As you make your final decision, the last question to be asked is who is offering you the best mortgage rate and product – your current lender or another lender?
Switching lenders does require a little more paperwork, but doing so will give you access to better mortgage rates.