When your existing mortgage is about to come to term, you have to begin thinking about what you want to do with your mortgage going forward. Although many homeowners see mortgage renewals as being fairly straight forward, renewal time in the mortgage world can be a time to re-evaluate your short term and long term financial goals. Here are a few things (of many) to consider before making your decision:
- Do I need more money?
- Are there any debts that I can include in my mortgage?
- Can I foresee any lifestyle changes between now and my next renewal date
- How long should I lock in my mortgage for this time around?
- How many years should my amortization be at?
Questions like the ones mentioned above will truly help you make an informed decision and also help you realize that although the act of renewing your mortgage is typically very easy, the bases on which the decision is to be made, isn’t always clear. Sometimes you may need more money in the near future which would influence you to refinance your mortgage to include the funds that you need. In other cases, you may decide to shorten your amortization to pay down your principle sooner. As you can probably see, there is a lot more to the decision process of mortgage renewals than simply signing up for another few years. The decision made to be in your existing mortgage would have been based on the circumstances of the time, while your decision today should reflect the circumstances you face today, and possibly those that may be faced in the near future.
Before you simply sign on the dotted line of your mortgage renewal papers, give Canadian mortgage services a call and let us help you determine the best course of action. When it comes to mortgage renewals, we can help! If you’re interested in Brampton & Mississauga refinance services, we are confident that we can help you too!
Q: What is a mortgage renewal?
A: A mortgage renewal applies only to existing homeowners who have a mortgage that is near maturity. Mortgages are most commonly 5-year terms (although, they can range from 1 – 10 years). At the end of the original agreed upon term, the bank will send you mortgage renewal offers to encourage you to extend your contract with them by ‘X’ number of years.
Q: Do I have to accept the mortgage renewal with my current bank?
A: No. You are not obliged to accept any of the banks mortgage renewal options – in fact, it is your privilege to do so only if you’re happy with the terms/rates being offered.
Q: Can I negotiate my mortgage renewal?
A: Yes, you can certainly try. Since we’re on that topic, we offer ‘mortgage renewal’ as one of our services because we love helping our clients negotiate their rates and terms, especially if it’s a mortgage we originally funded for you.
Q: What should I do if I don’t like the mortgage renewal offers from my bank?
A: If you don’t choose any of the renewal options before the deadline set out by the bank, your mortgage will likely go into an ‘open term’ at a higher interest rate OR could be renewed automatically (if the bank has that embedded in their clause). But don’t worry! Renewal options are sent out (mailed or by email) months in advance, so you’ll have plenty of time to get this sorted out. There are a couple of things you can consider:
- Have a CMS team member negotiate the existing renewal terms on your behalf
- Switch your existing mortgage to a more competitive bank offering lower rates (this is the most common approach)
Q: Will my mortgage renewal be the same rate?
A: Mortgage renewals are priced at ‘current’ market rates. So, it’s very likely that the renewal options will be different than the rate you currently have. That difference could mean a higher rate, or a lower rate. However, we’ll do what we can to help keep them lower!