A few months before your term ends, your lender will mail a renewal offer. It is easy to sign and move on, but the first offer is rarely the best one available. Five minutes of checking can save real money over the next term.
1. Compare the rate with the market
The rate in a renewal letter is often higher than what the same lender offers new customers, and higher than what other lenders would offer you. Ask for their best rate and compare it with a few alternatives.
2. Look at the prepayment terms
A slightly lower rate can come with a harsher penalty if you need to break the mortgage early. Ask how the penalty is calculated and whether you have lump-sum and payment-increase options.
3. Decide on the term that fits your plans
If you expect to move or refinance within a few years, a shorter term may suit you better than a five-year term.
4. Consider switching lenders
In many cases you can move your mortgage to a new lender at renewal without penalty and without re-qualifying under the stress test, though conditions apply. A broker can check what is possible for you.
5. Think about your equity
Renewal can also be a good time to look at adding funds, consolidating higher-interest debt or changing your amortization, if your goals have changed.
Talk to a Langley Mortgage Broker
Every file is different. If you would like to talk through your own situation, the team at M. Abdullah Mortgages is happy to help. Get in touch or start your application online.
This article is general information, not personal financial or legal advice. Rates, rules and lender policies change, so confirm the current details for your situation before making a decision.
