This Barrie 360 article is brought to you by Della Dwyer.
Renewing your mortgage doesn't have to be stressful. In fact, with the right strategy, it can be an opportunity to save a significant amount of money and secure a mortgage that perfectly aligns with your current financial goals.
Here are 12 tips to help you navigate the mortgage renewal process with confidence and score the best possible deal:
1. The early bird gets the … better rate
Don't wait for the renewal notice. In Canada, many lenders allow discussions up to 120 days beforehand. This valuable window grants you time to shop around and lock in a favorable rate, particularly if interest rate hikes are anticipated.
2. Don't be loyal to a fault
You may really appreciate and respect your current lender but that doesn’t always mean they’re the best choice. Loyalty is great, but so is saving money. Research and compare rates offered by other lenders and mortgage brokers. You might be surprised by what you find! Just be aware of any potential switching fees and ensure you qualify for the new mortgage.
3. Know your numbers
Prior to embarking on the renewal journey, thoroughly understand your current mortgage. This includes your interest rate, remaining balance, and any prepayment privileges you hold. This empowers you to engage in informed discussions with lenders and negotiate effectively.
4. Future-proof your finances
Life is unpredictable, so take a moment to assess your current financial situation and aspirations. Are you planning for a growing family, home renovations, or that dream getaway? Selecting a mortgage product that aligns with your evolving needs is crucial.
5. Don’t be afraid to research
Unleash your inner detective! Research offerings from various lenders and mortgage brokers. Numerous online resources and comparison tools exist, so delve deep and compare rates, terms, and features.
6. Know your worth
Interest rates are just one piece of the puzzle. Look beyond the headline rate and consider factors like prepayment penalties, portability options (if you move and want to keep your mortgage), and flexibility in payment frequency.
7. Understand fixed vs. variable
Fixed-rate mortgages provide stability with a locked-in rate for your term. Variable rates, on the other hand, can fluctuate with the market, but may offer lower initial rates. Understanding your risk tolerance will guide you towards the most suitable option.
8. Don’t settle
The renewal offer from your current lender might not be the best deal in town. Armed with your research and knowledge of your current mortgage, negotiate for a better rate. Remember, lenders often prefer to retain your business, so be polite but firm!
9. Stress test savvy
The Canadian government mandates a stress test to ensure you can afford your mortgage even if interest rates rise. Familiarize yourself with the current stress test qualifying rate to avoid surprises during the renewal process.
10. Consider short term options
If you're financially secure and interest rates are low, locking into a shorter fixed-term mortgage (like 2 or 3 years) can provide stability and allow you to potentially re-evaluate at a more opportune time in the future.
11. Think about a lump sum payment
If you have some extra cash on hand, consider making a lump sum payment towards your principal during renewal. This can significantly reduce your overall borrowing costs and shorten your amortization period.
12. Don’t forget about prepayment options
Review your prepayment privileges. Some mortgages allow you to make lump sum payments towards the principal without penalty, helping you pay off your mortgage faster.
Bonus tip: Seek professional guidance
If navigating the mortgage renewal process feels daunting, consider working with a mortgage broker. They can shop around for the best rates on your behalf and guide you through the entire process.
By following these comprehensive tips, you'll be well on your way to securing a fantastic mortgage renewal deal and saving a significant amount of money over the long term. Remember, a little preparation goes a long way, so get out there and conquer your mortgage renewal!
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