If your mortgage term is expiring and you still have an outstanding balance to pay, then you are up for mortgage renewal. Mortgage renewal is the process of applying for another sum of money, with the same or less value than your first mortgage. You also have to apply with your current lender.
Tips When Renewing your Mortgage
Here are some things to consider with a mortgage renewal:
Do a Quick Survey
Four months before your expected mortgage term is due, do some window shopping. Ask different banks about their possible principal and interest rate offer for your new mortgage, or simply ask your mortgage broker for a list of interested lenders for your new loan. This way, you will be presented with different options, given the best offer, with the lowest interest rate.
Assess Your Financial Situation
Did your income decrease or increase in the past few years? Budgeting everything in advance, will you able to continue to pay the mortgage interest in the following years or do you have to borrow more money from other lenders?
Read the Renewal Documents
Make sure to find time to read the renewal’s terms and conditions. Look at the new mortgage’s offered interest rate and compare it with other banks. Do not sign the contract immediately. Your finances for the next 5 years will depend on your loan’s interest rate. You can save a lot of money just by getting a slightly better rate and conditions.
Negotiate With Your Bank
Call your bank and ask about the designated interest rate. The value they input in the documents is usually the standard interest rate or even higher. If you are an outstanding client, you can easily negotiate with your current lender to cut the interest rate to its lowest possible value. Never feel ashamed to bargain your way to their best possible offer.
If after doing all the math, you still find that mortgage renewal is the best option there is, then sign and return the mortgage renewal form. The process is quick and easy, you just have to sit still and let your lender do all the work. If you still aren’t sure, ask your mortgage broker, they can give you the ins and outs of mortgage renewal and tell you if its worth it for you.