It is time to renewal! Now what?!
January 18, 2024 | Posted by: Sherry Corbitt
This is a timely question with over 82% of all mortgages coming up for renewal over the next three years! At renewal or maturity date of your current term, you typically have three options.
Stay with the existing lender - Renewal
Switch lenders (saved the best for last)
Let’s dive in and see what the differences are:
Stay with the current lender
There are a few reasons to stay with your current lender. Most important thing: do not just sign their renewal offer without consulting us to confirm it is makes sense. Sometimes lenders best offers are not what they have presented upfront.
After we have reviewed your existing lender’s offer for renewal, if the rate you are offered is a lower rate and the options are better suited for you, we will recommend that you stay with your existing lender on renewal. Please note that your renewal offer will be to JUST renewal the current balance and amortization - NO CHANGES (refinance, take more funds, increase the amortization, change people on title etc.).
There are some reasons why auto renewing may be the best option, for example if you have had a job loss or a change in your credit scores, we may suggest you take on a short-term mortgage with your existing lender to give yourself time to get your feet settled under you.
There is no fee to stay with the current lender (excluding alternate lenders and private mortgages who often have renewal fees). Typically, you will get your offer about one to three months before your renewal date (that’s when you call us if we have yet to speak). Do not be afraid to call and ask for your renewal offer if your lender hasn’t automatically sent it.
Majority of people will take the opportunity to refinance when their current mortgage comes due. You can refinance at anytime, but at maturity there will be no penalty to do it as you are negotiating a new contract.
With a refinance, you can;
Increase your mortgage amount (borrow from your equity) from paying down high-interest debt, buying a new car, renovating your home, paying for university, access funds for down payment to purchase a cottage, the use of the equity is up to you.
Change your amortization to a longer or shorter period, customarily done to reduce the monthly payment.
Add or remove someone from the title.
There are fees when refinancing and here is the approximate costs to except (that you can roll into the new mortgage): Legal fees $700-1000, appraisal $350-500, and a discharge fee from the current lender $250-400. We shop all our lenders that suit your situation and bring back the best of the best rate and term for your needs.
Change lenders: Either a Switch or a Refinance
Now this is interesting and we saved the best for last! If you are not making any changes to your mortgage, but are looking for the best rates and options, this is for you.
A switch allows you to move from lender A to lender B seamlessly. There is no fee to switch from one lender to another. The key to this decision is does it make sense? We would only switch for better rates and better options.
Pro Tip: There are ways to use this options instead of refinancing if you currently have a home equity line on your current mortgage. If this is you, let’s talk, and we can work some magic and change your ‘refinance’ into a ‘switch’ which may give you a better rate AND no costs to make the change.
On a Switch, the new lender pays the appraisal and lawyer fees, however, you may still have a discharge fee from the current lender.
Having one Choice is having NO Choice now you are empowered!
If your mortgage is up for renewal in the coming 1-3 years, let’s meet and review your plan!
Your Broker for Life,