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It’s been a few years since you purchased your mortgage loan and you’re all settled into your new home. Things have changed a lot since you signed that original paperwork and as the renewal gets closer, you’re starting to wonder if your contract should reflect that.
According to an Angus-Reid survey, 27% of Canadian mortgage-holders allow their mortgages to automatically renew without a second thought. Whether your financial goals have changed, your needs have shifted or you just want to explore your options, resist the temptation to quickly re-sign the contract and take some time to investigate new opportunities.
Don’t Leave Your Mortgage Renewal Until The Last Minute
You’d (hopefully) never plan out a whole new school year or epic globetrotting trip the day before so the same rule should apply to your mortgage renewal. No matter how pure your intentions are, not giving yourself enough time to get prepared and do your homework, may result in missed opportunities or worse, costly mistakes.
The more prepared you are when it comes time to meet with your lender, the better position you’ll be in for negotiations and understanding the value of staying versus leaving. Ideally, you should start shopping 3 – 6 months prior to your renewal date so you can get an idea of what the current market is like. Most will allow a 90-day guaranteed rate so if you find something better within 90 days of your renewal, you can bring that up when it comes time to renew.
While “breaking up” in general is never easy, some lenders may exaggerate about the difficulties that will arise if you choose to leave. Regardless of discharge fees or processes, don’t be scared away from doing what’s best for you. In fact, most lenders will actually absorb that discharge fee into a new mortgage, which is a tiny price to pay for landing a loan that gives you a better rate or more flexibility.
Do Make Time To Reassess Your Current Needs
If the last year has been any indication, it’s safe to say that our needs are always changing. As you grow older and move through different phases of life, your needs will inevitably change. Whether it’s a new baby, renovation projects on the horizon or a change of career, chances are your circumstances are not the same as they were when you first signed your mortgage paperwork.
Take some time to jot down your current needs and the ways in which your life has changed. This way, when you get to the point of reviewing your renewal options, you have a better idea of which mortgage product will be best suited to your new needs.
Don’t Be Tempted To Accept The Bank’s First Offer
A few weeks before your renewal, your bank will send you a letter which typically contains their initial offer. It’s important to remember that this letter is likely computer generated and presenting the posted rate, which may not be the “lowest rate” and typically allows for plenty of room to be talked down. Be sure to contact your advisor directly and see what they can do for you because there’s always room for negotiation!
These days it can be super easy to find the “best rates” online. But it’s important to remember that the best rate is not always the best option and there are a lot of other factors to consider when it comes to mortgage renewals. Before you make any quick decisions, make sure you do your homework, make a list of your needs and reassess your current financial position to determine how you should move forward with your renewal.
If your renewal is approaching and you’re looking to speak with someone about your options, contact us to start the conversation.