Don’t Renew Your Mortgage With Your Eyes Closed
January 10, 2022 | Posted by: Rosie Capellan
When your mortgage comes up for renewal, your lender will send you a letter suggesting you renew at their current offer. If you do, you’ll be renewing your mortgage with your eyes closed! This is your moment of opportunity to negotiate the best deal possible, either with your current lender or with a new one.
Do you know if the same lender remains your best choice?
Statistics indicate that two-thirds of homeowners (65 per cent) did not compare products from several different lenders to make sure they were getting the best deal the last time their mortgage came up for renewal. Auto-renewing your mortgage and not getting fully discounted rates could cost you hundreds of dollars each month. Wouldn’t it be better to put that money towards reducing your mortgage principal?
You also need to consider that your mortgage needs may have changed. This may be a good time to roll your high-interest credit cards and other debt into your mortgage to get one lower payment, boost your cash flow and save on interest costs. Or you may want to take some equity out for renovations, a second property or for investing. Your mortgage could be your best choice for lowest-cost funds.
Renewal is also a good time to decide whether you should consider a fixed or variable rate mortgage, increase or decrease your payments, or take advantage of prepayment privileges to pay your mortgage off faster.
When you switch your mortgage to a new lender, you will go through an approval process similar to when you took out the original mortgage. You can either assign your existing mortgage or you can apply for a new one if you want to borrow a larger amount.
At renewal, you can renegotiate everything pertaining to your mortgage – with no penalties – which means this is an important moment of opportunity. So as soon as you hear from your lender about your mortgage renewal, get in touch for an important second opinion!
