When your mortgage reaches its maturity date, it’s time to re-negotiate your interest rate. In most cases, your existing mortgage lender will make you a mortgage renewal offer that is usually not a competitive interest rate.
Contact me to get a lower rate that you truly deserve. Most lenders now offer “no cost mortgage switches/renewals”. Also keep in mind that many Canadians need to review their financial situation at the same time of their mortgage renewal. This is often a time to consider a mortgage refinance to eliminate high interest credit debts and for other reasons as well.
Mortgage Renewal Tips and Info
Just about every 5 years or 60 months time , Canadian residential home owners have got a mortgage loan due for a renewal. This can be a time to spend looking at a few critical components including the existing rate of interest setting in Canada, whether or not you will be keeping in your home or selling quickly as well as your overall economical plans. You’ll typically have about one hundred twenty days just before your mortgage renewal date to get started on searching for the latest home loan and save a rate of interest to maintain as security. Any drop in prices for the duration of this period prior to your mortgage being due , will normally be applied in your home loan approval as for every regular loan company has these types of procedures. Try to secure a rate hold early as you possibly can, as you in no way know when mortgage loan rates may possibly rise.
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What is a Mortgage Loan Renewal?
Once you initially obtained the home or renewed your very last mortgage loan, you chose some an amortization interval. Most home loans in Canada are have a 5 calendar year variable or fixed rate agreement and amortization of around twenty five or 30 many years. Some may have started at 35 or even 40 years. Most loan companies in Canada will renew your mortgage loan on the present amortization time period remaining. For that reason, when you started out having a thirty year amortization and 5 yr term , your mortgage loan will now be renewed or switched to a different loan provider with twenty five years remaining on the mortgage amortization. If you want to change the mortgage back again to a 30 yr amortization for example, in an effort to decrease the payments, you might incur legal fees .
Renewal Methods and Strategies to Consider
Your existing financial institution or bank will almost certainly give you a property finance loan renewal proposal about 2 months ahead of your maturity day. Most banking companies and lenders will not supply a really aggressive rate together with your mortgage renewal. Its the perfect time to talk to a mortgage loan broker who will possess a number of loan providers to be offered, mortgage rate specials and promotions as well as a high quantity of unique products that are available. Home mortgage loan brokers can set up a mortgage transfer or renewal into a new financial institution who processes the transaction without having any fees involved for the process. Usually the fees will be covered by the new lender such as appraisal, legal and discharge for example.
If you are intending to sell the home shortly, you really should consider an open adjustable price product to prevent short-term penalties and then look at getting a fixed rate mortgage for a longer time afterwards. If you’re staying within your present household then you will almost certainly want to have a secured rate or fixed product with a longer time period or term at today’s lower guaranteed rates. The longer your term , the longer the security will last you.
Also take into consideration a home refinance loan at the time your renewal comes up for processing. In case you have current credit card and mortgage debts, want money for an forthcoming renovation or for virtually every intent in which you could use income acquired from household equity. As your home loan is up for renewal, there would be no penalty expenditures incurred and that’s why you should normally examine your total funding needs and take into account mortgage loan refinancing at this present time.
Look ahead to your upcoming mortgage loan renewal and think about your financial aims before committing to your new mortgage.
Which Mortgage Products ,Terms & Payment Options should you choose?
Every client scenario is unique and requires a full review of your existing mortgage, property value & financial profile. I will assess your current situation and needs to find the best mortgage for you at a fully discounted mortgage rate.
Short-term and Variable Mortgage
If rates are low and stable you can generally pay a lower rate with a short-term or variable rate mortgage. You may roll over your term every 6 months or float your rate against prime, with the option of locking in to a longer term at a later date, with fully discounted mortgage rates.
Any term 3 years or longer is considered “long term” in today’s economy. You will have the comfort of knowing exactly what your payments will be and you will be able to manage your budget accordingly. When mortgage rates are low, you can take advantage of securing them for a longer period of time.
Mortgage Prepayment Options
Many lenders allow you to make a lump sum payment — usually 10% to 20% of the original principal balance. In addition, many mortgage products now include a “double-up and skip-a-payment” feature. This lets you “bank” extra mortgage payments for a rainy day, at which time you can “skip” them if you need to.
Mortgage Payment Changes
Most mortgages now allow the amortization to be adjusted by increasing the payment on closed terms by 10% — 20% per year, once annually.
Mortgage Payment Frequency
Most mortgages now come with the option to pay your mortgage at a frequency that matches your cash flow — weekly, bi-weekly or semi-monthly. The added benefit of the “accelerated” weekly and bi-weekly payments is that by dividing a regular monthly payment into two or four respectively, and deducting it at the new interval, an extra mortgage payment a year is made directly against principal. The surprising effect of this one extra mortgage payment a year is to reduce the amortization of the average mortgage by approximately 5 years, with cash savings at the end of the mortgage term.