If you have a mortgage renewal coming up, don’t be too quick to accept your current lender’s renewal offer!
Renewal time is an amazing opportunity to negotiate the rate of your next mortgage term and to make changes that can dramatically reduce your overall cost of borrowing.
On this page, you’ll learn important information about mortgage renewals and how to best take advantage of them.
Mortgage Renewals Explained
In Canada, mortgages are for a set period of time called terms. Terms can range from a few months to five years or longer.
At the end of each term, you need to renew your mortgage for another term.
What to Consider Before Renewing Your Mortgage
The financial goals you had at the beginning of your mortgage term may not be the same as those you have now.
There may have been a change in your income, a new baby, a large expense approaching, or an increase in your level of unsecured debt.
The possibility of moving within the next five years should also be considered when making your decision.
Plus, it's likely you've accumulated some equity in your home and there may be a better way to utilize it than letting it sit idle.
Your Renewal Options
You have 3 options at renewal time:
1. Renew Your Mortgage With the Same Lender
Your current lender will begin to follow up with you about your mortgage renewal approximately 4 months before the renewal date.
Their renewal offer will include a couple of term lengths and rates to choose between.
You have the ability to simply choose an offer and you will renew without any documents or credit checks required, however this is often not the best option to take.
2. Renew Your Mortgage With a Different Lender
Lenders are competitive at renewal time and there may be a lender willing to offer a lower rate to secure your renewal business.
As your mortgage broker, we will check with all lenders for the best deal that meets your current and future needs.
Your remaining amortization will stay the same. This is considered a mortgage “switch” or “transfer” to another lender.
Some documents and a credit check are required however, this process is much easier than the process of when you got your mortgage in the first place.
Most lenders will pick up the costs associated with transferring your mortgage so there is no cost to you - only savings!
3. Refinancing Your Mortgage
When you refinance your mortgage, you change your existing mortgage financing.
This could mean increasing your mortgage amount, changing your amortization, or making changes such as adding a secured line of credit.
Here are the most popular reasons for refinancing at renewal time:
Your new mortgage will pay off the existing one, and give you the money needed to pay off some or all of your high-interest debt.
You can use the improved monthly cash flow to pay down your mortgage faster and be debt-free sooner, or you can invest it for the future.
This is a basic example to show the potential benefit of consolidating debt into your mortgage. Let us show you how your debt consolidation refinance could look today!
Access Home Equity for Home Improvements
It may be a good idea to use your home equity when planning to renovate your home. Taking advantage of the low-interest rates available with mortgage financing are often a better idea than borrowing with a credit card or line of credit, or drawing on your investments.
Access Home Equity for Investing
Long-term, it is often more profitable to borrow at a low-interest mortgage rate and invest that money at a higher rate than to pay down the loan. As a matter of fact, this is how banks and insurance companies make money – borrowing money at a low-interest rate and investing it to earn a higher interest rate!
It is easy to lower your regular mortgage payments by refinancing and extending the amortization up to 30 years. You can use this extra cash every month to invest or simply live more comfortably with your improved cash flow. Refinancing with a reverse mortgage, on the other hand, can make it easy for seniors to never have to make a mortgage payment again.
How Early Can You Renew Your Mortgage?
We suggest you begin to consider your renewal options as early as one year before your renewal date.
If you’re planning to consolidate debt, we can calculate how much you would save in interest, compared to the cost of breaking your mortgage early. In spite of needing to pay a penalty, breaking your mortgage early can save you thousands depending on how much high-interest debt you’re consolidating into the low-interest rate mortgage.
If you have no plans to consolidate debt, we can set a 120-day rate hold for you at this time. This protects your rate for 4 months. If rates increase during that time period, we can re-evaluate whether it makes more sense to renew early with the rate you’ve locked in or wait until closer to your renewal date.
If rates decrease during that time, we can set another 120-day rate hold with the same plan in mind.
This may seem excessive, but it almost guarantees you will renew at the best possible rate. We can easily do this for you, and it could mean saving thousands over your next mortgage term.
How the Mortgage Renewal Process Works
Renew your mortgage in 3 easy steps:
- Tell us your goals: Applying online is easy and secure. If you prefer, we can discuss your goals and take your application information over the phone.
- Review your options: We will present you with options from multiple lenders based on your unique goals.
- Close your new mortgage: If refinancing now is what makes the most sense we can close your new mortgage in as little as 3 weeks. Otherwise, we can have everything arranged for your new mortgage closing date to line up with your upcoming renewal date.
How Much Money Can I Expect to Save With Dominion Lending Centres?
With Dominion Lending Centres being one of Canada's largest mortgage brokerage companies, our large volume gives us access to discounts not available elsewhere - and we pass those savings along to you. Our clients save thousands!
Sometimes we can even get our clients better rates from their own banks than what they can be offered at their local branch.
In addition to great savings, you also get unbiased advice from an experienced mortgage broker that is dedicated to you and focused on giving you an amazing experience.
It’s free, it’s easy, and it saves you time and money. Get your FREE no-obligation consultation today!
Take the Next Step Today
Take the next step right now by pressing the button on this page to get started.
When you fill in your name, email, and phone number, you will be redirected to the online mortgage application. If you prefer, you can wait for our call to discuss your goals and give us all the information you need over the phone.