Don’t renew your mortgage with your eyes closed


Don’t renew your mortgage with your eyes closed


When your mortgage comes up for renewal, your lender will send you a letter suggesting you renew at their current offer. If you do, you’ll be renewing your mortgage with your eyes closed! This is your moment of opportunity to negotiate the best possible deal, either with your current lender or with a new one. Do you know if the same lender remains your best choice?


Manulife Bank of Canada in their latest consumer debt survey found that two-thirds of homeowners (65 per cent) did not compare products from several different lenders to make sure they were getting the best deal the last time their mortgage came up for renewal. Auto-renewing your mortgage and not getting fully discounted rates could cost you hundreds of dollars each month. Wouldn’t it be better to put that money towards reducing your mortgage principal?


You also need to consider that your mortgage needs may have changed.  This may be a good time to roll your high-interest credit cards and other debt into your mortgage to get one lower payment, boost your cash flow and save on interest costs. Or you may want to take some equity out for renovations, a second property or for investing. You mortgage could be your best choice for lowest-cost funds.


Renewal is also a good time to decide whether you should consider a fixed or variable rate mortgage, increase or decrease your payments, or take advantage of prepayment privileges to pay your mortgage off faster.


When you switch your mortgage to a new lender, you will go through an approval process similar to when you took out the original mortgage. You can either assign your existing mortgage or you can apply for a new one should you want to borrow a larger amount.


Your lender may charge a discharge fee, and you may need to pay legal and appraisal fees if you are getting a completely new mortgage. You won’t have to pay for your mortgage broker’s service (oac) because the lender selected pays compensation for the services and mortgage solution provided to you.


Bring your renewal notice to your mortgage broker six months prior to your renewal date. Many lenders provide a 120-day rate guarantee for pre-approved clients to protect them against a rise in mortgage rates.


There are some great options out there; be sure to look around.