Mortgage Renewal
When you get a mortgage with a lender, your contract will have a specific timeline attached to it. This is referred to as your mortgage "term". This timeline can range from a few months to five years or even longer.
When you are approaching the end of your mortgage term or maturity date you are given the opportunity to pay off the remaining balance in full without paying a penalty. If you do not have the means to pay off the balance you're going to need to renew your mortgage for another term. At this point you have a number of different options and it is important for you to understand what options are available so that you can make an educated decision as to which one is best for you.
When you are approaching the end of your mortgage term or maturity date you are given the opportunity to pay off the remaining balance in full without paying a penalty. If you do not have the means to pay off the balance you're going to need to renew your mortgage for another term. At this point you have a number of different options and it is important for you to understand what options are available so that you can make an educated decision as to which one is best for you.
Mortgage Renewal Options
1. You can pay off your mortgage in full
If your mortgage is up for renewal and you have the means to pay off the remaining mortgage balance you can do so at this time without paying a penalty.
2. You Can Renew Your Mortgage With The Same Lender
As you approach your maturity date your current lender will contact you to discuss your renewal options.
Depending on which lender your mortgage is with, they may call you to discuss your options over the phone, send you a renewal letter or email, or they may set up an in person meeting. This contact will take place anywhere between 3-6 months prior to the maturity date.
Usually, your current lender really wants to keep your business. They will make it very easy for you to renew your mortgage in hopes that you accept their renewal offer without shopping around for a better deal elsewhere. Unfortunately, without shopping around first, you will not know if what your lender is offering is the best deal for you.
3. You Can Switch Your Mortgage To A Different Lender
If the renewal options your current lender is offering you turn out to be not so great of a deal or if you're unhappy with your current lender, you can move your remaining mortgage balance to a different lender. This is commonly referred to as a switch or transfer.
Current regulations require you to re-apply and re-qualify for your mortgage with the new lender. This includes a credit application, credit check and providing the lender with supporting documents. The process can be a little bit of work but is well worth it if you can save yourself a bunch of money.
4. You Can Refinance Your Mortgage
The best time to refinance your mortgage is when your mortgage is up for renewal as you will not be charged a penalty to do so.
Refinancing is the process of replacing your current mortgage with a new, larger mortgage and withdrawing a portion of your equity in cash.
5. You Can Do Nothing (not recommended)
Each Lender has a different process for handling your mortgage if you (the borrower) have not informed them of your choice of options by the maturity date.
Some Lenders will renew your mortgage into an open-variable mortgage. Open mortgages tend to have quite high interest rates but there are no penalties to get out of the mortgage. This is a great option if you need more time to figure out what you want to do with your mortgage.
Other lenders will automatically renew your mortgage into a short term closed mortgage at an interest rate of their choice. This means that you (the borrower) are essentially stuck with that lender until the term is up. You can still get out of the mortgage early but you will be charged an early break penalty to do so.
Ignoring your renewal date is not recommended as it could end up costing you a lot of money in unnecessary fees and penalties.
Whether I arranged your existing mortgage or not, I would be more than happy to review your renewal options with you. There is a very good chance that I can find you a better deal than your current lender is offering!
If your mortgage is up for renewal and you have the means to pay off the remaining mortgage balance you can do so at this time without paying a penalty.
2. You Can Renew Your Mortgage With The Same Lender
As you approach your maturity date your current lender will contact you to discuss your renewal options.
Depending on which lender your mortgage is with, they may call you to discuss your options over the phone, send you a renewal letter or email, or they may set up an in person meeting. This contact will take place anywhere between 3-6 months prior to the maturity date.
Usually, your current lender really wants to keep your business. They will make it very easy for you to renew your mortgage in hopes that you accept their renewal offer without shopping around for a better deal elsewhere. Unfortunately, without shopping around first, you will not know if what your lender is offering is the best deal for you.
3. You Can Switch Your Mortgage To A Different Lender
If the renewal options your current lender is offering you turn out to be not so great of a deal or if you're unhappy with your current lender, you can move your remaining mortgage balance to a different lender. This is commonly referred to as a switch or transfer.
Current regulations require you to re-apply and re-qualify for your mortgage with the new lender. This includes a credit application, credit check and providing the lender with supporting documents. The process can be a little bit of work but is well worth it if you can save yourself a bunch of money.
4. You Can Refinance Your Mortgage
The best time to refinance your mortgage is when your mortgage is up for renewal as you will not be charged a penalty to do so.
Refinancing is the process of replacing your current mortgage with a new, larger mortgage and withdrawing a portion of your equity in cash.
5. You Can Do Nothing (not recommended)
Each Lender has a different process for handling your mortgage if you (the borrower) have not informed them of your choice of options by the maturity date.
Some Lenders will renew your mortgage into an open-variable mortgage. Open mortgages tend to have quite high interest rates but there are no penalties to get out of the mortgage. This is a great option if you need more time to figure out what you want to do with your mortgage.
Other lenders will automatically renew your mortgage into a short term closed mortgage at an interest rate of their choice. This means that you (the borrower) are essentially stuck with that lender until the term is up. You can still get out of the mortgage early but you will be charged an early break penalty to do so.
Ignoring your renewal date is not recommended as it could end up costing you a lot of money in unnecessary fees and penalties.
Whether I arranged your existing mortgage or not, I would be more than happy to review your renewal options with you. There is a very good chance that I can find you a better deal than your current lender is offering!
Click the button above to contact me today.
Castle Mortgage Group
100-1345 Waverley Street
Winnipeg, MB, Canada
R3T 5Y7
100-1345 Waverley Street
Winnipeg, MB, Canada
R3T 5Y7