Mortgage Renewal
While most Canadians spend a lot of time, and expend a lot of effort, in shopping for an initial mortgage, the same is generally not the case when looking at mortgage term renewals.
Maximizing Savings & Benefits at Mortgage Renewal
Renewing your mortgage is a critical financial decision that can have a significant impact on your long-term financial health. Unfortunately, many Canadian homeowners miss out on potential savings by not giving proper consideration to their mortgage renewal. Nearly 60% of borrowers simply sign and return the first renewal offer from their lender without shopping around for a more favorable interest rate. This practice costs Canadian citizens thousands of extra dollars every year.
Why You Shouldn't Settle for the First Offer
Homeowners should never accept the first rate offer from their existing lender. Without any negotiation, simply signing up for the market rate on a renewal is unnecessarily costing the homeowner a lot of money over the life of their mortgage. Instead, it's important to start shopping for a new term between four and six months before your current mortgage term expires. Many lenders send out renewal letters very close to the term's expiration date, leaving little time for borrowers to explore other options. Tracking your mortgage term's timeframe is crucial so you can start looking for the best possible renewal rate well in advance.
Before you hear from your lender about renewing your mortgage term, consider consulting a licensed mortgage professional. They can shop around on your behalf, potentially finding you much better deals than what your current lender might offer.
Exploring the Benefits of Mortgage Renewal
Your mortgage is likely one of your biggest expenses, making it imperative to find the best interest rates and terms available. Shopping around at renewal time can save you substantial amounts of money over the life of your mortgage loan. Here are some key benefits to consider when renewing your mortgage:
1. Get a Better Rate
Renewal time is an excellent opportunity to shop around for a more favorable interest rate. Since switching lenders at renewal time doesn’t break your mortgage, it’s an easy way to potentially lower your interest rate and save money. With interest rates expected to decrease as we move into 2024, taking the time to shop the market could significantly reduce your mortgage costs.
2. Consolidate Debt
Renewal time is also an ideal moment to assess your existing debt and consider consolidating it into your mortgage. Whether it’s holiday credit card debt, car loans, or education expenses, consolidating multiple debts into your mortgage can simplify your finances with one easy payment. Plus, mortgage interest rates are generally lower than credit card rates, potentially saving you money.
3. Fund Home Renovations
If you have been planning home renovations, renewal time offers an opportunity to utilize some of your home equity to finance these projects. Whether it’s updating your kitchen, renovating your bathroom, or even purchasing a vacation property, tapping into your home equity can help bring these dreams to life.
4. Change Your Mortgage Product
If you’re not satisfied with your current mortgage product, renewal time is the perfect chance to make a change. Perhaps you want to switch from a variable-rate mortgage to a fixed-rate mortgage to gain more stability, or vice versa. You can also adjust your payment or amortization schedule to help pay off your mortgage faster.
5. Switch Lenders
If you’re unhappy with your current lender, renewal time is a great opportunity to switch to a different bank or credit union. A new lender may offer lower rates or a mortgage product with terms that better suit your needs. Switching lenders can help ensure you get the best value out of your mortgage.
Take Action for Financial Success
Don’t be one of the 60% who simply sign their renewal letter and send it back. Instead, take the time to explore your options and consult with a licensed mortgage professional. By shopping around at renewal time, you can save money and ensure that your mortgage aligns with your financial goals. Whether you’re looking to secure a better rate, consolidate debt, fund home renovations, or change your mortgage product or lender, renewal time is your opportunity to make your mortgage work for you. As a Mortgage Broker, I can help you review your situation, explore beneficial changes, and find the best options for your current life stage, setting you up for future financial success.