Most homeowners will need to renew their mortgages at least once before they fully pay off the loan. This just means you take the money you still owe on your mortgage and renew it for another term. Going for an auto-renewal option may seem like the most convenient way to handle it, but it is not always the right decision. Renewing your mortgage is an opportune time to try and get a lower interest rate or added options to your mortgage. Sometimes, this involves a little extra effort on your part. Here are 8 tips you can use when it comes time for mortgage renewal in Toronto:
- Update your financial goals. Have your goals changed since you first got your mortgage? Renewal time gives you the chance to make changes to your mortgage that fit your new financial goals.
- Start early. If you are considering making changes to your mortgage, look around at your options several months before your renewal date. It can take a while to do research and decide on the best mortgage renewal option for you. Give yourself the time you’ll need to make the best decision.
- Aim for a better rate. Before you sign the renewal slip and send it back to your lender, consider asking around to see if you can find a lower rate. Don’t be afraid to call your current lender in the process and see if they can get you a better mortgage rate.
- Use a mortgage agent. A mortgage agent can save you time and energy while finding you a great mortgage fit. They often have the information for several lenders on hand and will be able to help you get the best rate and renewal options.
- Get a rate hold. If you find a lender with a better rate than what you currently have, ask them to hold it for you. Lenders may be able to freeze the rate for up to 120 days, which can give you time to consider whether you want to take it or not.
- Switch early. If you’ve decided to switch lenders, it is important to start the process as soon as possible. It can take some time to get the mortgage changed. Not doing so early enough could mean you are stuck with your current lender for the next term of your mortgage.
- Know the downsides of the mortgage offer. Be sure to ask about any penalties or fees that will come with the new mortgage term. For example, are there prepayment penalties if you decide to pay the mortgage off before the term ends?
- Be realistic about your life. One big consideration you’ll need to make before you refinance is how long you plan to stay in your home. Most mortgage renewals will be for five-year terms. Can you still picture yourself there in five years? Or do you anticipate a move before then? The answers to these questions will be important in helping you decide the best refinancing option for your situation and your future.