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If you have been an excellent mortgagor, your lender is likely to renew your mortgage loan. But if your circumstances have altered significantly, then other solutions might be available such as adding a co-signer or guarantor, consolidating debts, finding subprime lenders or selling your home.
Changing lenders requires extensive research and gathering all necessary paperwork. This could take time and may involve fees, such as an appraisal.
Term
Renewal time for mortgage loans presents homeowners with an invaluable opportunity to assess their finances and negotiate terms, as well as take an inventory of current market trends and see whether switching lenders might make more sense.
Those who are satisfied with their current lender and rate can often renew with the same term to save time, avoid having to go through requalifying, credit checks and appraisal fees and stay with what works.
An early renewal offer from many lenders allows borrowers to secure a fixed mortgage rate before the original term ends, giving you plenty of time to shop around for mortgage options and lock in an affordable repayment solution.
At mortgage renewal time, other options for modification include changing payment frequency or debt repayment plans or purchasing an affordable property. Unfortunately, however, lenders may decline to renew a mortgage due to missed payments, poor credit scores, or excessive debt levels – in which case another lender could take alternative action such as declining to offer another mortgage option.
Interest rate
Most lenders will send you a mortgage renewal offer with new rates and term options, which you can accept or negotiate to secure an even better one. Alternatively, switching lenders requires meeting their application requirements, including passing their mortgage stress test.
Renewal allows you to choose a new term of one-, three- or five-years; payment frequency options like monthly, bi-weekly or weekly; consolidate debt or pay for home improvements.
Homeowners may wish to renew their mortgage when interest rates drop, potentially saving them money over time. When renewing, it is also wise to take your future plans into consideration; changing mortgage terms might accommodate any fluctuations in income; this is particularly relevant if interest rates rise before your current term has run its course.
Collateral charge
Mortgage renewal can be an opportunity to assess your finances and take stock of current interest rates. It also presents an ideal chance to switch lenders, perhaps to one offering different products or better rates; or simply to requalify for your existing mortgage loan.
Federally-regulated mortgage holders must notify you 21 days before your term ends of their renewal options, but most lenders reach out sooner with offers of new mortgage rates, term length options and any applicable fees.
Some lenders may offer reduced mortgage rates to encourage early renewal, so it is wise to shop around when renewing early and use a mortgage calculator to compare rates. Consulting a broker before renewal date can also help identify the most competitive deals available – just keep in mind that collateral charge mortgages cannot be transferred without first receiving legal discharge and registration from your current lender.
Fees
Mortgage renewal provides an ideal opportunity to assess your finances and negotiate more favorable terms, including changes to interest rate, term or payment frequency as well as switching loan types from closed mortgage to open mortgage – helping you pay off faster or achieve a lower debt-to-income ratio.
Lenders offer promotional rates to lure borrowers in early and renew with them, knowing that many are in difficult circumstances with high mortgage rates and the mortgage stress test preventing them from qualifying elsewhere for another mortgage loan.
As soon as your mortgage contract is set to end, it is wise to start shopping around for rates and terms. A mortgage affordability calculator or talking with a broker are excellent resources for doing this. Depending on the lender, breaking out could result in fees as well as tighter qualification guidelines – these may need to be taken into consideration before switching lenders.
In conclusion, renewing your mortgage іn Ontario іs a significant financial decision that requires careful consideration and planning. This step-by-step guide about mortgage renewal іn Ontario provides valuable insights into the process, including how tо assess your options, negotiate terms, and potentially switch lenders for better rates. By following these guidelines, you can make informed decisions and secure a mortgage renewal that meets your needs and financial goals.
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