What happens if you renew your mortgage?
It’s a milestone to know that your mortgage renewal is fast approaching. Your contract is only in effect for a specific period. It means you have to renew your mortgage at the end of its term until you reach the balance in full.
One of the good reasons for staying with the same mortgage lender is convenience. He does not need to requalify you, so the process is much faster than switching to another lender. Second is when you are currently experiencing a financial crisis, switching to a new lender might not be a great idea. There is no assurance that they can provide a much lower rate than your current mortgage and sticking with your current lender is the safest thing to do.
How do you shop around for the best mortgage rates?
Before signing for that renewal contract, consider other deals with multiple lending institutions to find the right mortgage for your situation. You can scout for alternative lending brokers or companies months before the end of your contract term, as you can opt not to renew your mortgage with the same lender. This gives you the freedom to choose the best mortgage rate that is suitable for you.
Consider your financial situation. Let’s be realistic. Your financial goals when you started your mortgage might not be the same as your goals today. A lot could have changed along the way like you have acquired a car, just had a baby, or your child is now in college. Whatever your current needs are, consider the things you will be having five years from now.
Negotiate for a lower rate.
You can also chaff for a better offer with your current lender. You can haggle for a discounted rate by telling your lender about the offers you received from other lending institutions. Just keep in mind to have proof on hand before doing this to make your conditions plausible. If you do not take the initiative, your contract will be automatically renewed. They usually take advantage of your busy schedule to make an easy and fast way to renew.
Most people are afraid to negotiate with their lenders. Come to think of it, asking for a lower mortgage rate is not a bad idea. If lenders don’t want to lose you, they will give you what you proposed. But if they can’t, you can always look for a better lender with the lowest mortgage rates.
Switching for a new lender.
Switching for a different lender is normal. Especially if you found a much lower rate for the same terms and conditions. But this does not mean that your application is already approved. Your new lender still needs to go through the application process and decide if you are qualified for a mortgage. You may also want to consider the costs of switching to a different lender and make sure he discusses the following with you:
- Set-Up or registration fee
- Appraisal fee
- And other administration fees
Clarify with the lender if they will shoulder these costs if you decide to switch. Also, if you already have mortgage loan insurance, do not forget to mention it with your new lender to avoid paying for a new premium. When shopping around, it would be a good idea to use a mortgage broker. They could prepare your credit report and list down the lenders who can work with you and instantly tell you the rates you qualify for if you decide to switch lenders. You can also ask your broker to make a rate hold if you want to give your current lender a chance to match that rate Rate hold secure the rate if you haven’t decided on the renewal.
Decision Making.
If you are already certain about switching lenders, have done a lot of research, and considered your financial status, better do it as early as possible. You will need to submit your mortgage application as if you are applying for a new one. It means you will need to obtain all required documents. Have your mortgage broker plenty of time to process your application, or you might end up with your current lender for another term.
Comparing mortgages may sound like a lot, but everything will pay off once you score that lower rate you are looking for. Saving a few points of percentage might not seem good at first, but it could save you from financial vulnerability in the long run.
The Bottom Line.
A borrower must approach either their current lender or a new one with the application and finish a new loan application to process a refinancing mortgage. Note that refinancing subsequently requires re-evaluating an individual’s or a business’s financial situation and credit terms.
If you’d like to discuss refinancing, give us a call today to review your options. We have one of the top mortgage brokers in Canada, Saif Abdulah. He is the best mortgage broker you can have a conversation with regarding refinancing queries and concerns.
If you are from Toronto, North York, Scarborough, Pickering, Oshawa, Ajax, Whitby, Etobicoke, Thornhill, Richmond Hill, Markham, Stouffville, Uxbridge, Vaughan, Concord, Woodbridge, Mississauga, Oakville, King City, Caledon, Nobleton, Milton, Aurora, Newmarket, East Gwillimbury, Keswick, Bradford, New Tecumseth, Georgina, Innisville, Guelph, Barrie, Ottawa, Orangeville, Collingwood, Kitchener, Hamilton, Cambridge, Waterloo, St. Catharines, Niagara Falls, London, Peterborough, or Ontario, don’t hesitate to contact us. We’ll help you find the best option that can help you get back on firm and secure financial footing. It would be our privilege to make you feel more financially empowered!
