Mortgage Renewal: Everything There is to Know
Discovering How to Get The Renewal Mortgage to benefit yourself
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Mortgage Renewal
Mortgage Renewal is an everyday event for 40% of homeowners in Canada who have opted for a mortgage to construct their property in the first place. It is pretty hard to repay the first mortgage on a property entirely due to modern-day homeowners' ever-growing financial demands and needs. For such individuals, mortgage renewal is the perfect solution, enabling them to renew the existing mortgage and make sure that they have adequate time to finish paying off the balance debt. The concept is quite simple, in the case of renewing a mortgage, the outstanding balance should continue the exceptional balance amount in the initial mortgage by taking a new mortgage on the amount. This new mortgage would have a lower interest rate than the previous one, which is the usual industry trend unless the market is against it.
Renewal Procedure
Most property owners might not be aware of the mortgage renewal process, mainly because they might not know the maturity term of their first mortgage. The first mortgage lender will send a renewal notice to all the term-ending borrowers, notifying them about the status of their mortgage and providing an intimation on the renewal of the same. Some borrowers might prefer to continue with the same lender by simply signing the mortgage renewal notice and completing the renewal procedure swiftly. Experts, however, do not recommend this right away, as some of you might be eligible for a lower interest rate and term by taking out a mortgage with a different lender.
Let us discuss the whole renewal process and understand some of the essential procedures involved in the same.
Financial Assessment
Before signing the agreement for a mortgage renewal, make sure to evaluate your financial status and goal personally. Usually, current lenders tend to stick with the current mortgage terms and only fluctuate in interest rates, which might not be suitable for all. The current lender should compare renewal extension notices offered by your existing lender with other offers in the market. For example, in cases where the current mortgage term is ten years, the lender might offer a renewal on the existing mortgage by another ten years. Such a scenario might not be suitable for property owners looking to sell their property within the period and for those planning on relocating to a different part of the country for business or personal reasons. Also, remember to check the house equity line of credit option on the table before signing up for anything long-term.
Lender Comparisons
Never stick to the option provided by the existing lender, as they might be some who could be offering a better package. Shop around for such mortgage renewal options at least three months before the official mortgage renewal date. It is highly recommended to shop for loans at least six months before the due date. Be sure to negotiate a deal with the current lender quoting the offers you might receive from other lenders. Getting expert guidance is also recommended, especially for those who get frantic when dealing with a whole lot of paperwork. Property owners must get all the paperwork ready before setting a date for the agreement signature. Last-minute documentation will only create stress, which everyone should avoid at all costs.
Mortgage Renewal Negotiations
Renewing a mortgage requires the individual to discuss all the different charges and offers you might be eligible for with their existing lender. Usually, existing lenders can offer lower interest rates and terms, but they seldom do so for their current customers. This is because of the notion that most of the borrowers would be busy with their personal and professional commitments and might not have the time to go through all that is offered. This is a cardinal sin committed by more than 40% of borrowers. Mortgage Renewal rates will only increase with time, so proper mortgage renewal negotiations with the current lender and other lenders in the market are mandatory for landing the best deals.
"One of the significant hurdles property owners face is that they tend to deflect from negotiating even with their existing lender thinking that it is the best rate available in the market, but that is not a fact. "
One of the significant hurdles property owners face is that they tend to deflect from negotiating even with their existing lender thinking that it is the best rate available in the market, but that is not a fact. If you cannot achieve the desired mortgage rate from your existing lender, then there is every chance of getting an attractive offer from other lenders in the market, so make sure to shop around and know the rates on offer. Most of the borrowers tend to shift their mortgage to a different lender because they offer a better interest rate and mortgage renewal terms overall.
Mortgage Brokers
Utilizing the services of an expert in mortgage renewal is always a better plan, as you would no longer need to reach out to one lender after another for offers. Expert brokers have tie-ups with all major lenders, and within a few days or so, you could have multiple offers. Mortgage brokers are experts, and they have experience handling numerous cases just like yours, so make sure to find the right broker. A rate hold is one of the solutions borrowers could implement to hold the interest rate offered by a lender for up to 120 days, and this should provide enough cover for the borrower from fluctuating rates, as it is based on the market trend and might not be set by lenders in all circumstances.
Time Your Decisions
When it comes to mortgage renewal, never commit the mistake of hurrying into making a decision. It would help if you had adequate time at your disposal to sort out all the lenders, rates, long-term possibilities, financial goals, stress, etc., so give at least 3 to 4 months to arrive at a decision. If you plan to switch lenders, the documentation procedure alone might take around a week or two, so plan well ahead in time.
Verdict
Almost 50% of Canadian borrowers tend to realize that they could have attained a better deal at the last minute. We were hoping you could prevent this, and more property owners should recognize the importance of the mortgage renewal procedure on the whole. We have discussed all you need to do to achieve the best mortgage renewal deal, so try to devote time to it. You could save almost $300 to $500 in the monthly interest rate paid towards the renewed mortgage in the long run.
