Mortgage Refinancing for Beginners

If you are coming up to your mortgage renewal date, you may have already received a letter from your lender. Typically, these are sent out when there are 3 months remaining on your term. While nearly 60 percent of borrowers simply sign and send back their renewal, did you know that this is actually the best time to shop around for better rates and options?

Most standard terms are 5-year terms and, with that much time having passed since signing, the market rates could be very different once the term is up! Despite this, lenders tend to provide higher rates on renewals versus new clients as they are hoping that the ease of renewal will prevent you from seeking out new rates. However, shopping around for a better rate is not as difficult as it sounds – especially with the help of a mortgage broker – and you could end up saving hundreds a month, depending on your situation!

Ideally, you should be keeping track of your own mortgage term end date as shopping for a new rate between four and six months before your expiry will ensure you are able to find the most affordable option for you.

After shopping around, you may find that your bank is actually offering a great rate – in which case you can simply submit the renewal. On the other hand, if you are able to seek out a lower rate, you will be glad you put in the effort to find out! It is also good to note that renewal time is a great opportunity to make an extra payment on your mortgage, if you are able.

Beyond renewing your mortgage, home owners also have the option to transfer or switch the mortgage when the term is up. While this can be done any time throughout the course of the mortgage, there may be penalties associated with changing the mortgage before the term is up as this is considered breaking the contract. Transferring to another lender is generally done to get a better rate, but you will need to go through the entire mortgage process again – including the ‘stress test’ – which makes shopping around at renewal time an even smarter option.

If your mortgage is coming up for renewal and you want to find out if there is a better mortgage product with lower terms out there for you, contact me today! I can help you find the best option for where you are at in your life now and help you to ensure future financial success.