Renewing Your Mortgage
Just like an annual financial plan, you should review your mortgage regularly. Renewal time is the ideal time to reassess your options and re-examine your overall financial situation. Our mortgage professionals are available to answer any questions you have and to help you choose the best options and best lender for you.
When renewing your mortgage, sometimes the rate guarantee period can be critical. Some lenders provide a 30-day period and some 60 days to lock into your next term. Obviously the longer this period is the better it is for you, because if rates move after you lock in, you may miss out on the better rate.
This is where one of our mortgage specialists can help. We can arrange a rate hold for four months – this can beat your current renewal often by 90 days. This will give you rate protection in an increasing rate market.At renewal, you have several options:
- pay off all or part of your mortgage
- change the term (the interval between renewals)
- change the amortization period (the time required to fully pay off your mortgage), or
- change the frequency of payments (weekly, etc.).
Switching Your Mortgage
If your mortgage is up for renewal with a major financial institution, switching it to another lender is easy. Quite often other lenders hungry for your mortgage will offer you a better deal. This can be done at no cost to you because the new lender wants your business and will pay for the legal and appraisal fees to do the switch.
You may have a discharge fee charged by your current bank however the money you save by switching frequently outweighs the costs.
Give yourself plenty of time to shop before your mortgage renewal. Before your mortgage has to be renewed, you choose the day, month and year when you want to receive your reminder.
Should You Break Your Mortgage for a Lower Rate?
Yes and no. When you break your mortgage contract in favour of renewing your mortgage at a new rate and a new term, you're faced with a penalty charge to reimburse your financial institution for the lost interest income. As a basic rule of thumb, the prepayment charge is based on three months' interest or the interest rate differential (that's the difference between your present mortgage rate for the balance of your term and the current rate you want to take out), whichever is greater.
The amount of the prepayment charge will tell you whether or not you should renegotiate your interest rate. Generally speaking, the shorter your remaining term – which will ideally be less than a year – the smaller the penalty, and the more attractive early renewal becomes. On the other hand, the longer the term left on your mortgage, the greater the prepayment penalties, which makes early renewal less desirable. At Mortgage for Less we can calculate the costs verses the benefits of breaking your mortgage early.
We Can Calculate It for You
Since we have information on most lenders, our mortgage brokers can easily make the calculations to determine if you should break your mortgage to take advantage of current lower rates. We'll make the decision easy for you.
4 Easy Steps for Switching Your Mortgage
1. Apply online or give us a call first
When we have your information we can go ahead and get you approved with the right lender and get a rate hold for up to 120 days. That means that if rates go down during the 120 days, you will get the lower rate.
2. Mortgage approval documentation
Once your application is approved you'll receive a mortgage approval letter outlining the documentation you'll need to finalize your mortgage. We send you approval via email or fax – whatever you like. Then we discuss all the terms and conditions. We will provide you with unique strategies on how to pay off your mortgage as soon as possible. Your bank will not do this – they want your mortgage forever. Our goal is to shorten your amortization.
3. Finalizing your mortgage
We make the arrangements to get your home appraised at NO COST TO YOU. After the appraisal and closer to your switch date, you will meet with a legal representative to sign your final mortgage documents. You will need to provide personal identification.
4. Welcome to Your new Lender! We are there to help
A welcome letter will be sent to you verifying that your mortgage has been transferred to the new bank / institution. We still represent you as your Mortgage Broker, so even after your mortgage has been transferred, we will continue to provide you with advice and strategies and assist you quickly and efficiently.
To switch your mortgage, you will require the following documentation:
- Complete mortgage application
- Current mortgage statement or renewal letter
- Verification of income, typically a job letter and pay stub. Self-employed clients should acquire a Notice of Assessment (NOA)
- Your home insurance policy
CONTACT US TO HELP YOU ANSWER THESE AND OTHER QUESTIONS!PHONE: 416-699-1010
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