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There comes a point in the lifespan of most mortgages where you will need to renew it for another term – unless you have already paid it in full. This is your opportunity to secure a new mortgage rate, change your payment plan, or potentially switch lenders entirely.
However, far too many Canadians do not realize that a mortgage renewal is not just a chance for your lender to provide you with an updated rate and term. Instead, it is an opportunity for you to renegotiate your mortgage in order to find the best deal on the market.
So, if you have an upcoming mortgage renewal, let’s take a look at everything you need to know in order to get the best outcome you can.
But first, if you want to prepare for your upcoming mortgage renewal the right way, click the link below to book a free strategy call with our team at LendCity today to get started.
Start Preparing Early for Your Mortgage Renewal
One of the first things that you need to do when it comes to handling your mortgage renewal is to start preparing for it early. In Canada, your lender is required to send you a mortgage renewal statement 21 days before your mortgage’s date of maturity. While this time frame does give you some room to attempt to negotiate a better deal with your lender, the truth is that you can start negotiating and preparing for your mortgage renewal as early as 120 days before your date of maturity.
Finding Your Date of Maturity
So, if your lender only notifies you of your date of maturity and upcoming mortgage renewal 21 days before the deadline, how are you supposed to start preparing 120 days early? Well, fortunately for you, your date of maturity will be listed on your mortgage contract. Additionally, if your mortgage is processed through online banking, you may also be able to find this date in your online banking information. Once you find this date, simply count back 120 days in order to determine when you can begin this process.
Are You Satisfied with Your Current Lender?
Once you have found your date of maturity, the first question you need to be asking yourself is whether you are satisfied with your current lender or if you would rather move forward with another lending option.
Your satisfaction can be impacted by a variety of factors such as whether your mortgage lender is charging you a higher-than-average rate, whether they can provide you with smaller or larger monthly payments in order to satisfy your goals, or if they have any restrictive conditions on their mortgage products that limit your ability to make the most of your investment.
Even if you are satisfied with your current lender, you might be able to improve your bargaining position by telling your lender that while you are satisfied with your current mortgage, you do understand that your mortgage renewal is coming up soon and you plan to look for the best available offer. Frequently, this will incentivize your lender to cut you a better deal in order to keep you as a customer.
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Consider Your Mortgage Needs
Beyond considering your own satisfaction, there are a few key factors that you need to look out for when preparing to renew your mortgage. These factors are:
Can Your Lender Give You a Better Rate?
As the market shifts over the course of your term, interest rates are bound to fluctuate – especially if you have a variable rate mortgage. So, when you are looking to renew your mortgage for another term, it is important to consider your options in regard to interest rates so that you can continue on with the best rate for you.
So, when you reach out to your lender before your mortgage renewal, make a point of asking them what rate they would be able to give you afterwards. Sometimes, if rates are rising nationwide, your rate is going to be higher no matter what. In this case, you may want to secure the lowest possible increase on your rate so that you can continue to have the best available mortgage.
If another lender is offering a lower rate than the updated rate you hear from your lender, you may even be able to bring this rate over to your lender to see if they would be willing to lower their offer. If not, then you are free to migrate to the new lender.
Do You Need to Change Your Mortgage Payments?
Financial situations change, and as a result you may need to find a new structure for your mortgage payments. Perhaps your cash flow has slowed down due to urgent renovations, and you will need to find a way to make lower monthly payments or less-frequent payments. Alternatively, your cash flow may be much stronger, and you want to switch to bi-weekly payments so that you can pay down your mortgage faster. You may even simply want to switch to a mortgage that allows you to make additional payments as you wish in order to get ahead when it makes sense to do so.
Ask your lender if they would be able to accommodate a change in monthly payments that suits your needs. If not, you may wish to find a new lender who can before you need to renew your mortgage.
Are You Trying to Consolidate Debt?
Sometimes, mortgage renewal is a great opportunity to consolidate high-interest debts into one manageable payment. Instead of simply renewing your existing mortgage, you can instead refinance it to draw on the equity in your property. This can then be used to pay off other high-interest loans such as hard money loans or credit card debt.
Contact a Mortgage Broker
When you are preparing to renew your mortgage, it is important that you go into things with a professional on your side in order to help you find the best option available. That is why at LendCity, we pride ourselves for working with investors like you in order to help you secure the best available rates and payments for your mortgages every single term.