When is the best time to renew my mortgage?
It’s important that you start your mortgage renewal process early, at around 120 days before the maturity date of your current mortgage term. This is an ideal time to start your mortgage renewal process without the risk of your current lender imposing any kind of prepayment penalty because of breaking your mortgage term early. Starting early will also give you enough time to conduct your own research online and obtain as much information as possible before approaching any lender or mortgage broker. This will give you some leverage during the negotiations. Are there any costs involved when changing lenders?
You may incur several costs when changing lenders, including:
- An appraisal fee may be necessary to confirm the value of your mortgage property
- New lender setup fees, such as registration, discharge, transfer and/or assignment fees from your current lender
- A fee to cover the removal of any collateral charge on your mortgage from the current mortgage and subsequent registration of the new one (this will require you to either clear the debt or transfer all loan agreements that you secured using the collateral charge to the new lender)
- Other administration fees
It’s a good idea to ask your new mortgage lender whether they will pay for some or all the costs incurred during the switch.
Do I need a new mortgage loan insurance premium when switching lenders?
Yes. There are some instances when you may be required to pay a new mortgage loan insurance premium when switching lenders, such as:
- When your loan amount increases
- When you extend the amortization period
That said, you should inform your new lender if you have mortgage loan insurance on your existing loan to avoid paying the premiums twice. Simply ask for the certificate number from your current lender. Consider asking for a copy of the insurance certificate when getting your mortgage contract.
You will be required to sign the registration documents obtained with your mortgage contract, usually with the assistance of your lawyer or notary.
Mortgage Renewal Ontario
Many first-time homebuyers in Ontario use a mortgage to finance their purchase. Most, if not all, of these mortgages come with an amortization of between 20 and 30 years. But you are restricted to taking loans with a maximum term of 10 years (applies throughout Canada). So when your mortgage term expires before you complete your mortgage repayments, you will need to renew that mortgage for at least one more term.
Mortgage Renewal in Ontario is Beneficial to both the Lender and the Consumer
Mortgage renewals essentially protect both the consumer and the lender. For the lenders, it prevents them from agreeing to a fixed interest rate for a couple of decades. Consumers, on the other hand, get an opportunity to change the terms of their loan that they are not happy with and cannot tolerate for the entire amortization period. Renewal provides you with an opportunity to reexamine your monthly mortgage payment to assess whether it is suitable for your financial situation and lifestyle. For instance, you may be earning significantly more than when you first took your mortgage, and are considering making higher payments to pay down the principal sooner. Conversely, you may be thinking about paying for your children’s education and need to reduce your payments to a manageable level. Renewal is an opportunity for you to get the best rates, but reports indicate that about two-thirds of homebuyers in Canada don’t change their mortgage terms during renewal. This is partly because of their busy schedules, and also due to the hidden costs, such as penalties for early repayment or charges for porting the mortgage to a different property in case you want to move.
Things to consider when planning your mortgage renewal in Ontario
The rules and steps for reviewing your mortgage renewal agreement in Ontario are consistent with other provinces across the country. You have a narrow window, between 180 and 120 days to the expiry of your existing loan’s term, to consider whether you want to renew your mortgage loan with your current bank. If you start the renewal process earlier, you may incur prepayment charges because you will be terminating your original mortgage plan early. If all the payments have been on time, your renewal should be rather straightforward. But rather than simply signing the form and submitting it, it is important that you find out ways to cut down your interest costs, especially if they constitute a sizable chunk of your income. Speak to one of our experienced Mortgage Agents/Brokers to help you shop the market. Other things to consider when renewing your mortgage include:
- Prepayment options – make additional lum psum payments
- The terms and conditions offered by your bank and other banks with regard to the interest rate and closing costs;
- Child education or retirement.
Why you need to switch your mortgage broker
When it comes to finding the right mortgage renewal rates and options in Ontario that meet your future needs, Northwood Mortgage Agents and Brokers are your best resource. With access to the best offers from multiple lenders across the province, we can help you find a renewal option that will match your current and future needs.
Mortgage renewal provides homeowners with the option to either stay with their current lender or choose another entity that provides them with a more suitable rate and term. This is the ideal time to re-examine your needs and find a mortgage that is best suited for your current needs and future goals.
According to our Northwood Mortgage renewal brokers, the best time to renew your mortgage is 4 months (120 days) before the current term ends. This will ensure that you don’t incur a prepayment fee or other penalties imposed by many lenders in the region.
Mortgage Renewal – Things You Should Know
If you have qualified for a mortgage before, then it means that you and your lender made a contract outlining your plan to make the loan repayments over a specific period of time, which is referred to as the mortgage term.
If you can pay the balance in full within the agreed time – which can range from several months to five years or more – you can renew your mortgage at the end of the current term.
If your mortgage contract is with a bank or any other federally regulated financial institutions, you will be automatically provided with a renewal statement at least three weeks before your current term expires. This is a legal requirement. If your lender doesn’t plan on renewing your mortgage, they’re also obligated to notify you at this time at the latest. The lender can use an appropriate method of communicating with you, such as electronic statements or paper statements sent via mail, to your liking.
The mortgage renewal statement should include the following information:
- The remaining principal or balance at the date of renewal
- The interest rate
- The term
- The payment frequency
- Any fees or charges that apply
The renewal statement typically arrives at the same time as the mortgage renewal contract. The lender indicates a renewal for the posted rate that applies for a minimum of 30 days until the end of your term, to protect you from any potential increase in rates during this period.
Outline Your Mortgage Needs to Save Your Money
It’s important that you consult a mortgage renewal broker well in advance for assistance in finding and determining the best mortgage renewal options for your current situation.
Here are some questions to ask yourself when searching for the right mortgage:
- Would you like to change the payment frequency?
- Can you afford to increase your payments to enjoy lower interest rates and pay off your mortgage sooner?
- Would you like to consolidate your debts that have higher interest rates to pay a higher mortgage amount?
- Are you in a position to make additional payments?
- Do you plan on obtaining optional life, disability, critical illness, or employment insurance?
- Are you satisfied with the level of service provided by your current lender?
Don’t wait until your lender sends the renewal letter for you to start shopping around for better mortgage options. Start the process a few months before your term ends, and carefully consider all your options.
Visit your current lender to try and negotiate a better interest rate. If you plan to switch your mortgage to a different lender, keep in mind that the new lender may not necessarily use the same criteria as your original lender to determine your qualifications for a mortgage. Your new lender has to approve your application to successfully switch your mortgage plan.
Unless you take timely action, your mortgage renewal will happen automatically without having the chance to review the interest rate, terms, and conditions.
FAQS
Why Choose Northwood Mortgage?
At mortgage renewal time, you may find your needs have changed. Perhaps this is the right time to tap some of your home equity for a renovation project? Or maybe you’re considering a cottage or vacation property, or want to use some of your equity for other long-term investments.
Take a look at your other debts; many Canadian homeowners have taken advantage of historically low rates and rolled all their other higher-interest debts into their mortgage at renewal
Mortgage renewal is an important moment of opportunity, to not only get new rates that allow you to save money, but also restructure your finances according to your goals.
Just make sure that you:
- Don’t let your renewal date creep up on you
- Know what you want
- Meet with a broker in advance
Having multiple lenders compete for your mortgage renewal is a great way to ensure you get the best rate for your situation. We have access to over 50 lending institutions, including major banks, credit unions, trusts and other national and regional lenders, which means we can put significant negotiating power behind finding the best mortgage to fit your specific situation.
Provide us with the maturity date of your mortgage, and let us contact you four months prior to your renewal to get the ball rolling. There is no obligation.
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