Navigating Your Mortgage Renewal
A lot of you took advantage of the incredibly low interest rates back in 2020/2021, locking in some very manageable payments. But now, what happens when your mortgage term ends?
At the end of your term, your mortgage becomes due and payable in full. If you happen to win the lottery or receive a large inheritance, you can pay off the mortgage in full with no penalty (as long as it's paid on the maturity date). However, for the rest of us, the only option is to renew the mortgage for another term. But what if the rate your current lender offers is much higher than your existing rate? You could face "payment shock," where your mortgage payment increases drastically, impacting your monthly cash flow.
This is where my expertise shines. I provide valuable advice and options to make the mortgage work for you.
Did you know that 51% of Canadian homeowners don’t plan on changing lenders when their mortgage comes up for renewal — and 9% aren't even aware they can switch lenders to get a better rate?
Renegotiating your mortgage at renewal time is a fantastic way to save money and ensure you have the best mortgage product for your financial situation.
Options to Consider When Your Mortgage Term Ends:
Renew with the Same Lender
Switch/Transfer to Another Lender
Refinance the Mortgage
What is Mortgage Renewal?
Your mortgage is up for renewal when you approach your maturity date. This is when your current mortgage contract ends, and your lender will present you with options to renew the mortgage with them. However, don’t just sign on the dotted line without exploring other options first. While it might be quick and easy to stay with your current lender, it could end up costing you more than you realize. Take the time to see if switching to a different lender could save you money.
What is a Mortgage Switch/Transfer?
You might find a lower rate with another lender. Switching your current mortgage balance and remaining amortization to another lender is known as a mortgage transfer. A title insurance company, like First Canadian Title (FCT), facilitates the transfer of funds from one lender to another, with costs generally picked up by the new lender. Typically, the only fee involved is the discharge fee from your current lender, which can range from $200 to $400 depending on your province.
What is Mortgage Refinance?
Refinancing replaces your existing mortgage agreement with a new one, allowing for a new interest rate, term length, and even a longer amortization. If you want to increase your amortization to reduce your payments or take equity out of the property, mortgage refinancing might be your best option. Though it may come with a slightly higher rate, refinancing can lower your monthly payment and improve cash flow, especially if you’re consolidating higher-interest debts into one manageable payment.
In Conclusion
Exploring your options for mortgage renewal is a smart financial move that can help you save money, access equity, and improve your overall financial situation. Take some time to explore different mortgage options and reach out to me ahead of time. I can help you find the right mortgage for your needs now and in the future.
Know anyone whose mortgage is coming up for renewal? Feel free to forward this email to them.
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