Mortgage Renewals: Advice and Tips!
Most mortgages in Canada have terms of five years. But what happens when that five years is over? Usually, the homeowner will receive a notice from the lender which tells them it is time to renew their mortgage. In that notice, the lender will offer a new rate along with a form for the homeowner to sign in order to accept the renewal terms. Many homeowners sign this notice without a second thought, but in doing so they could be missing out on significant savings.
Before you sign a mortgage renewal offer, we recommend following these tips:
- Don’t wait until you receive your renewal notice. Contact your mortgage broker a few months ahead of time so they can start shopping for the best rates and terms.
- Never sign your mortgage renewal offer without comparing other rates first. Even if you wish to stay with your current lender, knowing what rates are being offered by other lenders can give you negotiating power.
- Consider both variable and fixed rate mortgages. Just because one type of mortgage was right for you five years ago, it doesn’t mean that the same type of mortgage is right for you today. Talk to your mortgage broker about what type of mortgage is best for your situation.
What if my mortgage lender turns me down for renewal?
In most cases, if you have been diligent in making your mortgage payments, you should not have any trouble getting a mortgage renewal from your current lender. If there has been a significant change in your credit or income however, there is a possibility of getting turned down. In this circumstance, it is important to contact your mortgage broker as soon as possible. Mortgage brokers have access to many reputable alternative lenders that may be able to help you get a mortgage.
What if I can’t pass the stress test?
If you got your current mortgage prior to the introduction of the new stress test and are unable to pass the stress test, you won’t be able to switch to another federally regulated lender. As long as you’ve been making your payments however, you should be able to stay with your current lender even if they are a federally regulated bank. Unfortunately, your inability to pass the stress test will limit your negotiating power.
Contact 1onefund Financial today!
Is your mortgage coming up for renewal? Contact one of our mortgage agents today and let us help get you the best rates and terms!