• Douglas Paterson

Don’t Waste Your Big Opportunity!

Updated: Mar 22, 2021

Mortgage Renewal Time Is Important


When you find yourself approaching your mortgage renewal date, it’s likely you will receive a note from your current lender. Typically, these are distributed to homeowners when there is roughly three months remaining on an existing mortgage term. Believe it or not, nearly 60% of homeowners in this scenario simply sign and send back a commitment to the proposed renewal! Less than half of homeowners realize mortgage renewal time is a rare opportunity and the absolute best time to shop around for improved rates and better borrowing options!


hand holding a pen and signing a formal document

Most standard mortgage terms are 5-years and after that length of time the financials of the country will have changed and mortgage rates are likely to be quite different from the environment was five years earlier. Despite this, the bank and other lenders typically provide higher rates at renewal time (to existing clients) versus clients who are new to the bank or currently have their mortgage business elsewhere (potential new business). When your mortgage comes up for renewal, you are in a position of strength as you represent potential new, long term business, for all the institutions outside your current lender. When lenders hold existing business/clients they often look to take advantage of the situation (the same as your home and auto insurers do by the way) and is betting that the ease of a quick renewal will dissuade you from seeking out other options or advice from an expert. However, it’s important to realize;

  1. Decisions about your mortgage are perhaps the biggest financial decisions you will make during your lifetime.

  2. Shopping for a better mortgage rate is not nearly as challenging as it sounds – particularly if a savvy homeowner enlists the help of a mortgage broker, who will shop and negotiate on their behalf.

  3. Taking the time to work with a mortgage broker can often save you thousands and in some cases, tens of thousands of dollars.

  4. Not all mortgages are the same, in fact they vary considerably from lender to lender. Differences in penalties, prepayment terms and transferability being just a few examples.

  5. Renewal period places a homeowner in a position of strength that should always be capitalized upon.

a collection of coins and pens on top of a paper document

In a perfect world, a savvy homeowner will be keeping track of their mortgage term end date. This is important because making sure you have time to shop the market for the best available mortgage terms is critical to maximizing your financial success. Beginning the process between three and five months prior your current mortgage terms expiry date is recommended. This guarantees you (or your mortgage broker) will have sufficient time to find and compare the most affordable options and the best terms to fit your unique situation. Alternatively you can have a mortgage broker keep track of your renewal date and do the shopping for you. Having an expert prepare the best two or three options from the hundreds available on the market will normally result in the best final decision and piece of mind.


During the shopping around process you may discover that your bank actual has a strong offer and the renewing with them is in fact the best option. On the flipside however, if your mortgage broker can find a lower rate, terms and flexibility that better suite your situation, you will be thrilled you made the time and put in the minimal effort to make it happen. It is also important to remember that renewal time is an ideal opportunity to make additional payments against your outstanding balance as well as consider refinancing should debt consolidation make sense. Many people find refinancing at renewal time makes sense for them as they are looking for additional funds to take a dream vacation, do some renovations, buy a car or any other things that are important to them and require borrowed funds.


picture of two hands shaking in collaboration

As a homeowner, in addition to renewing your mortgage, you have the opportunity to transfer or switch your mortgage when the current term comes to an end. While this might be something you want to do during the course of the mortgage, there are likely to be penalties associated with breaking the mortgage before the term is up (reality is you are in fact breaking the contract). While in some peoples situations it makes good sense to break a mortgage. Transferring to a new lender is typically done to improve an interest rate, but in addition to the penalties, a new borrower, at a new institution, will have to go through the mortgage application process in full - including the ‘stress test’ - which makes reviewing your options during the Renewal Period even smarter. Don't miss this important opportunity.


Bottom Line

When your mortgage is coming up for renewal and you’d like to find out if there are better mortgage products, with lower rates and better terms out there for you, please don't hesitate to reach out to me. If you renewal month is more than 4 months away, please consider filling out our Renewal Reminder form so we can begin comparing mortgages well in advance and bring you the best available options when the time is right. In partnership with Dominion Lending Centres, we will help you find the best mortgage for your unique circumstances. It is important to invest a bit of time to know your options and work with a professional who will ensure the process is beneficial to your bottom line and piece of mind. You and your family’s financial success is always our main.


picture of Doug Paterson - mortgage broker

Doug Paterson

Mortgage Agent in Ontario, Canada.

Dominion Lending Centres.

416.432.8836 | www.dougpaterson.com


 

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