Spring and summer conjure up thoughts of fresh starts and new beginnings, but did you know it’s also a great opportunity to think about your mortgage renewal? Many of our clients are celebrating their home purchase anniversary, and whether you’ve been in your home for 1, 5 or even 20 years, if you’ve got a mortgage renewal coming up, you’ll want to learn your options and how to prepare for this important financial event.
When is it time to renew?
Your bank or the lender who carries your mortgage has the responsibility to notify you in writing within 21 days that it’s time to renew your existing mortgage. This typically comes in the mail and may even outline a new proposed term and rate being offered. While you may be tempted to just sign it and send it back, don’t forget that you are in a position to negotiate your mortgage terms and rates, and you can even switch lenders if you are so inclined. This could take several weeks to finalize, so you’ll want to get a head start before that renewal notice arrives in the mail.
So much can happen between one mortgage term to the next. Big changes like a wedding, new baby, new job, separation or divorce, caring for elderly parents and so on can impact your finances. Further, you may want to consider a home renovation or addition, in which case you may be able to re-finance your mortgage and free up some funds to pay for that. For this reason, it’s important to start thinking about what your objectives are at least 2-3 months prior to your renewal. Again, you don’t want to leave it until the last minute or you may lose out.
Questions you should ask
Whether you’re shopping around for a new mortgage lender, or just looking into your mortgage rate or term options, there are some key questions to consider:
1. Will I pass the stress test? Even for mortgage renewals, the Canadian stress-test rules will apply. Make sure you can manage your mortgage payments under these new regulations; here’s a handy calculator to help you get started.
2. How often can I pay? If you want to increase your number of mortgage payments, for example, you will be paying off your mortgage faster.
3. What is the best interest rate for me? Interest rates are holding still at present, meaning you have some great negotiating power. Be sure to shop around for the best interest rates; you aren’t obligated to renew with your lender’s first offer.
4. What, if any, fees are involved? There may be penalties or fees involved if you renew too early or late for example, or if you need additional financing. Again, shop around don’t be afraid to advocate on your own behalf.
No-one wants to pay more interest on their home than needed, which is why it’s important at renewal time to find out what are your mortgage options, rights and responsibilities. Your home is usually the biggest investment you’ll make, so be sure to do your research and ask lots of questions. If you have any questions about the buying or selling process in the Collingwood, Wasaga Beach, The Blue Mountains, Grey County or the Meaford area, we here at Clairwood would be honoured to help you along the way. Our knowledgeable and experienced Clairwood Realtors® are just a phone call away at 705-445-7085.