Mortgage Renewal In 2016?

How To Save Money In The Renewal Process

If you have a mortgage renewal coming up this year you can save money by taking a few simple steps. Renewals are an opportunity that do not come up very often, so it pays to take advantage.  Here are the things you can do at renewal to save money over the life of your mortgage.

Start The Process Early

Many people who inquire about their renewal do it right before their renewal date; often 2-3 weeks before.  You can still switch lenders at that time, but you will be at the mercy of current interest rates.  We can hold a rate for 4 months. If rates have been increasing, you may be holding an interest rate significantly lower than what is available near your renewal date.  Call me 5 months before your renewal date so we can gather what you need to take full advantage of a rate hold period. It can save you if rates increase!  

If you already have your mortgage through me, I will contact you as your renewal approaches.  If you don't, let me know your renewal date and I will set you up with a reminder.

Call Me!

You should be checking with a mortgage professional who has access to a variety of mortgage lenders to understand if what you are being offered is market rate, and more importantly, if the product and term will meet your needs.

According to CMHC's 2015 Mortgage Consumer Survey, only 49% of mortgage renewal clients negotiated terms different than those offered in their renewal letter.  Many renewal offers have inflated mortgage rates, knowing that most people just sign it and send it back.  Early renewal offers are becoming very popular as a way to keep mortgage clients.  That is great for you if the rate is competitive, but not if it is inflated.

Pick With A Plan

One of the biggest mistakes is agreeing to a new term without thinking about the future.  "I had a 5 year fixed before so I just chose that again" is something I hear a lot.  If you sell a year later you will pay a big penalty for that decision.  Time brings change.  How long do you see yourself in your home?  Would you prefer a variable now that you have more income and equity? Often what you had before is not what you need now.  Picking the right term and product can save you more than just getting the best rate. 

This is also your one opportunity to refinance without a penalty so you want to make sure you have your mortgage set up the way you want. Are you worried about cash flow and want to re-amortize to reduce your payments? Do you need funds to develop your basement? Would you like to set up a home equity line of credit you can use to pull out funds for down payment when you downsize? 

For most mortgages, you can switch to another lender for little or no cost.  Looking to see what there is being offered by other lenders at your renewal can save you big bucks over the life of your mortgage.