Mortgage Blog

Negotiate Your Mortgage at Renewal Too!

May 1, 2020 | Posted by: Brandi Pierik and Matthew Pierik - Red Deer and Calgary Mortgage Brokers

Be Sure to Negotiate at Mortgage Renewal Time Too!

When you first agreed to the particulars of your current mortgage, you considered a number of different factors such as the rate, term, amortization period and other important features. Before your mortgage reaches its maturity date (in five years or however long it has been set), you’ll need to renew the remaining balance for another term.

The renewal process represents a great time to review the details of your mortgage along with your personal financial situation to ensure they’re still in sync. Factors such as your income and expenses may have changed since you first obtained your mortgage, so you’ll want to take these into consideration.

You’re not obligated to renew your mortgage with your current lender so this is also a good time to shop around, with the help of your mortgage broker, to see what other lenders are offering and perhaps save some money. Your mortgage broker has access to a wide variety of different lenders and will do the legwork on your behalf to find the best mortgage options suited to your needs, potentially saving you thousands of dollars over the course of your new term.

Your mortgage broker will also help you navigate the mortgage stress test, implemented by the federal government in 2018. Ultimately, the stress test has made it more difficult for first-time homebuyers to obtain a mortgage and more cumbersome and expensive for those with mortgages up for renewal.

Beware of early renewal letters

If you decide to stay with your current lender at renewal, you’re not required to pass the stress test, but this shouldn’t deter you from shopping the competition for a better rate and product.

Your current lender will likely send you an early renewal offer to get you locked in with them for another term. Signing this offer is often not in your best interest! Be sure to have your mortgage broker look it over so you can also see what other lenders can do for you.

Beware that your current lender may be tempted to charge you a higher interest rate, knowing you’ll have to face the stress test if you switch to a different lender.

Typically, at renewal time, your mortgage balance is lower and it’s possible that your income has increased, so passing the stress test may not be an issue.

Renewal is also the best time to tap into your home equity to improve cash flow, pay down debt, send your kids to school, buy an investment property, etc, because you won’t be charged a penalty for breaking your mortgage.

If you don’t take any action, your current lender may automatically renew your mortgage, so make sure you’re prepared well in advance of the term expiring and don’t miss the opportunity to save your money!

Do you have questions about what’s best for you at renewal? Answers are just a call or email away!
Brandi Pierik
Mortgage Broker

DLC A Better Way
403-588-8657
www.wehaveamortgageforthat.com

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