By now we all are very aware of the Bank of Canada’s rate hikes over the past year which have left a lot of us wondering what rates will be looking like when it comes time to renew our mortgages. While your new interest rate is undoubtedly an important thing to consider when thinking about your mortgage renewal, there are plenty of other factors that you should also be thinking about before renewing your mortgage.
How early can you start the renewal process?
Typically we recommend starting to think about your mortgage renewal about six months before your current term ends. This gives you plenty of time to consider your renewal options and think about your current financial situation, generally, we find that for most people, their financial situation looks quite different since they originally took out their mortgage. Perhaps you got married, had children or are now taking care of an elderly relative. You might have switched jobs and so have a different income level, a lot can happen over the term of your mortgage!
Most lenders can hold an interest rate for up to 120 days or four months, so we always recommend giving yourself plenty of time and letting us look at all of the options available to you before you renew.
Should you switch lenders?
Staying with your current lender does have some perks, such as not having to requalify using the stress test, but it should not always be the default option. While it might be tempting to simply sign with your current lender, we recommend letting us shop around on your behalf before you renew as you may find that a different lender can offer you a lower interest rate. Your financial situation may have changed and so you may now qualify for some specialist programs offered by some lenders, this is especially applicable to those who are self-employed.
How long do you plan on staying in the home?
Before you renew your mortgage you should consider if you are planning on staying in the home for the whole term of your new mortgage. If you are thinking about downsizing your home or moving somewhere with more space in the next three to five years it would be a good idea to make sure that your renewal is as flexible as possible.
Not all lenders offer portable mortgages, where you take your current mortgage including the term and rate, to a new property and so it is important to let us shop around to find a lender that will allow you to move with your mortgage should this be something you may need.
Do you want to make any changes to your mortgage?
The end of your term is a great time to consider if you want to make any changes to your current mortgage. Perhaps you want to switch from a variable rate to a fixed or vice-versa. Maybe you want to extend your amortization to lower your monthly payments or you might want to withdraw some of the equity that you have built up in your home. Your renewal period is a good time to think about refinancing.
We want to make sure that whatever decision you make, you have been well informed and equipped with all of the tools that you need to decide on your renewal. We want you to be confident that you are getting the best possible deal and that you are financially comfortable until your term ends. Give us a call today to see how we can help you.