Mortgage renewal provides an ideal opportunity to assess your financial goals and future plans, with options such as increasing term length or altering payment frequency or locking into a lower interest rate being available to you.
Gather all the documentation needed for renewing your mortgage, such as income statements, employment verification forms and tax returns. Evaluate different lender rates, terms and fees before choosing one with which you feel most at home.
It’s a chance to shop around
Before your renewal date arrives is the ideal time to shop around for mortgage rates and make an informed decision regarding whether or not to continue with your current lender at renewal time.
At the same time, this can also provide you with an opportunity to review your financial goals and assess if another mortgage term could better align with them. If you plan on downsizing or moving within five years, perhaps a different term would better suit you; or if interest rates continue their steady decline prior to maturity date and you could find even lower payments than what is currently offered to you.
Comparing lenders’ offers by searching “mortgage renewal rates” or “current mortgage rates” should make finding an amazing rate easier than ever, though keep in mind that switching lenders could require going through an application process and incur additional fees such as home appraisal costs.
When making your choice, be sure to carefully weigh all of your options and don’t be intimidated by negotiating. Your lender wants your business and may offer a competitive renewal rate due to recent interest rate hikes.
It’s a chance to renegotiate
Mortgage renewal periods provide an ideal opportunity to negotiate better terms with your lender and save thousands in interest-carrying costs over the life of your loan.
Assessing your eligibility for mortgage renewal is an important step in this process. Review your current mortgage terms and conditions as this will give you a good foundation to understand all available renewal options, such as payment frequency and amortization periods. Also keep an eye on the economy and financial markets to gauge how changing interest rates could have an impact on your payments.
If your interest rates will increase before their renewal date, consider asking your lender for a rate hold or prepayment limit extension of up to 120 days – this could protect against higher rates until next renewal time!
Reconsider your mortgage payment schedule and decide how much you can afford each month. If your finances allow it, increase amortization payments so as to decrease principal more quickly – this will help reach payoff goals faster and own your home sooner than planned. Also ensure there are no prepayment penalties attached to existing loans.
It’s a chance to renew early
Renewing your mortgage can provide an opportunity to lock in a lower rate before the end of your term, depending on lender policies. With some providers, this may allow you to secure a contract up to 120 days ahead of its end; making this an attractive solution if interest rates are expected to rise and you want to avoid spending more than necessary on your payments.
As soon as you renew early, lenders typically send a renewal offer with information on new rates they’re offering, possible term length options and your principal and interest payments for five years. This gives you a good idea of how different mortgage terms will impact your monthly costs as well as enable comparison between various lenders’ rates and fees.
Before your mortgage renewal date arrives, begin researching rates with multiple lenders by visiting each lender’s websites or speaking with a broker to gain an idea of the rates you might encounter when switching lenders at renewal time. Since renewing mortgage applications is less complex than applying for new ones, making a change early is simpler – giving yourself enough time to work with a specialist and ensures no last minute scrambling is required!
It’s a chance to switch lenders
Renewal time provides an ideal opportunity to shop lenders for the most favorable rates and terms, so plan your renewal at least several months ahead so that you have ample time to compare offers from multiple lenders and brokers – while still giving your current lender time to respond when facing stiffer competitor rates.
If you find a rate that’s better than the original offer from your lender, it may be possible to negotiate and secure a new mortgage contract at that rate. Just be sure you provide evidence of what rate was found as well as meeting any additional requirements listed in your mortgage renewal contract, such as administrative, legal or home appraisal fees.
Some homeowners use their mortgage renewal as an opportunity to change lenders or alter the terms of their loan agreement. For instance, if your spouse’s income will increase by the time of renewal, shortening your term could help align it with this life event.
Switching mortgage lenders requires going through the application process again, though it should not be any more complex than when you initially obtained your loan. An experienced mortgage broker will be able to assist with this step and help ensure your new mortgage fits with your financial goals and objectives.
