Your Guide to Renewing Your Mortgage with a Mortgage Broker
When you qualify for your first mortgage, you may feel like you can rest easy. After all, the mortgage is already in place. Be careful, your mortgage journey does not end there. Eventually, your mortgage term will come to an end. Whether it’s one, five, or ten years, you have to renew your mortgage at the end of your current term.
The Mortgage Renewal Process
A mortgage renewal is the instance when your present-day payment term matures, and you have to sign on for a new term. It is also an opportunity for you to renegotiate the terms of your mortgage. The conditions could include the length of your next term, your interest rate, and/or your lender.
Normally your current lender will send you a renewal letter, hoping you are lazy and will just sign it without double checking your options. It is important to ensure that they are offering you a competitive term for your mortgage renewal.
As the mortgage renewal draws nearer, your lender might send you an email or mail. The message is a renewal statement that usually arrives three weeks before the end of your term. It will include details such as your current balance, the amount paid, payment frequency, and a renewal form for you to sign.
When you sign the form, you are engaging in a new mortgage contract. What you have paid off has already been deducted. For example, if you took a mortgage for $500,000 and your balance is $350,000, your new mortgage is worth $350,000.
Why Signing Could Hurt You
Most homeowners renew their mortgage with their current lender. Unfortunately, the majority of homeowners accept the terms presented in their renewal without negotiations. After all, signing the document and sending it back is more comfortable than re-negotiating. Since most lenders expect their clients to accept the terms and retain their current lenders, they withhold the best offers. In the end, the lenders are in business to make money.
If you are planning to switch lenders, it’s because you want to save money in the long run.
An experienced mortgage broker will know which lenders will cover the cost of switching for you. Typically, there is no cost, however you do have to prove your income and collect your documents so that the new lender can verify the information.
If you still have a long time left on your amortization schedule, you can save money by getting a lower interest rate and keeping your payment the same. Consequently, you will pay off your mortgage faster.
A mortgage broker can help you look for new lenders and get a good deal. Remember to ask the mortgage broker or the new lender if they are willing to absorb the renewal costs for you before committing.
Some mortgages offer an early renewal option. This option is convenient when you a few months before the maturity of your mortgage. You can lock in interest rates before mortgage renewal. Even if the rates change before renewal, you will use the locked rate. Other renewals allow a break on prepayment, where you can make a lump sum payment to the principal without any charges.
Mortgage Renewal Problems
If you made all your payments in time, you should experience no problems during mortgage renewal. However, If your credit rating drops or if your financial situation changes, you may be in the unfortunate situation where your current lender will not renew for you. In this case time is of the essence, and it is important to contact a professional mortgage broker as soon as possible to figure out your options.
Mortgage Renewal in Edmonton
If you are planning to renew your mortgage, seek the help of a mortgage broker. You will receive expert advice and have an easier time deciding what is best for you. For more information on mortgage renewal in Edmonton, contact Dominion Lending Centres today.Request Mortgage Info