When you were applying for your mortgage, you went about it like pro – you shopped around for the best product suited to your needs, reviewed the terms and conditions and negotiated for the interest rate. Or perhaps, being a new buyer, you were just happy to be approved for a mortgage – any mortgage at any rate. Then you just sat back and enjoyed your home for the last five years or so. And now you got a notice in the mail that your mortgage is up for renewal…
What should you do? Do you just assume you are being offered the best product after your last negotiation five years ago and sign on the dotted line? Of course you should not! It’s a new ball game altogether so you have to do your due diligence to find out what products are available for you in your present situation.
1st consideration: Are you just wanting to renew your existing mortgage or do you want to take advantage of your increased equity to take out some money against your property. The first option is considered a renewal while the second option is considered a refinance or equity take-out. A renewal is generally straightforward with minimal documentation while a refinance would require you to submit income documentation, get a credit record check and a new appraisal of your property.
2nd consideration: What is the best rate available for you? Oftentimes, your lender would send you a renewal rate that may not necessarily be the lowest they could offer. They do this because they know that a lot of borrowers do not know any better or that borrowers do not want to go through the hassle of negotiating for a lower rate. A few hours reviewing different options may save you hundreds, if not thousands, on your mortgage payments.
3rd consideration: By now you’ve been down this road a few years so hopefully you have gained some insight that not all mortgages are the same. You now have an idea that you could have more flexibility with regards terms and conditions of your mortgage. You can go for variable instead of fixed rates or vice versa. You can go for 30 or 35 years amortization instead of 25 to lower your monthly payments and alternatively you can opt for shorter amortization period. You can opt to pay a bigger lump sum amount at each calendar year to pay off your mortgage faster. You can opt for a product with minimal penalty if you want to break the mortgage early.
There are so many lending institutions in the market with so many products for you to avail of. Without the added stress of a home purchase and with more time to review your options, there is no reason for you to just sign on the dotted line when that renewal notice comes in the mail.
Take the time necessary to call me at 604 783 9097 so we can discuss the different options available for you.