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The Ultimate Guide To Mortgage Renewals In Canada

Mortgage RenewalIs your mortgage close to maturity? Are you looking to renew your current mortgage? Do you know your mortgage options?

Navigating the mortgage renewal process is not easy. You need to make sure that you understand the terms you’re agreeing to. At the same time, you should know how to negotiate the terms that you want.

If you want to learn how to get yourself a better deal with your mortgage renewal, just keep reading. We have everything you need to know about the mortgage renewal process and how to use it to your advantage.

What Is A Mortgage Renewal?

Mortgage RenewalMortgage renewal comes at the end of your mortgage term. If you still owe a balance on the property that you’re applying the mortgage to, it’s time to renew your mortgage for another term. Hence, you have a mortgage renewal.

Every time you have a mortgage renewal, you have the potential to assess the terms of your current mortgage. We recommend comparing that mortgage to your current financial goals. This can help you assess whether the mortgage is right for you or not.

You know that it’s time for the mortgage renewal process when you receive a notice in the mail from your current lender. However, we highly recommend that you take action before you receive this notice.

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Mortgage Renewal Process

If you pay attention to your current mortgage terms, you can be proactive about your mortgage renewal. If you get ahead of the situation, you may be able to renegotiate the terms that you’re currently under.

Let’s take a look at what the mortgage renewal process looks like and how you can take advantage of this time.

1. Shop Ahead of Time

As we mentioned, you shouldn’t wait until you get the slip of paper in the mail. When you notice that your mortgage is going to end soon, you should start looking around for the best interest rate.

We recommend starting your search about four months before your current mortgage agreement ends. This would be four months before the mortgage maturity date.

This is also when most lenders will allow you to undergo the early renewal process. This allows you to renew your mortgage without paying any prepayment penalty for breaking the terms of your mortgage agreement early.

If you’re not sure where to start, you can count on us. We can help you get a free mortgage switch if you switch to another lender.

The new lender will cover the costs of the switch, including the appraisal cost and legal fees. Plus, they will cover a mortgage penalty of up to $4,000 if you end your previous mortgage sooner than the term ends. The new lender will also cover up to $400 in discharge fees.

2. Consider Financial Goals

It’s unlikely that your life looks exactly like it did when you signed the agreement for your current mortgage. You may have gotten a new job, lost a job, had a child, sent a child to college, gotten a pet, or something else.

Any kind of event that changes your financial situation is going to change your financial goals. You need to keep these in mind when you’re shopping around for mortgage renewal offers.

At the very least, you need to figure out whether you need to negotiate your current monthly mortgage payment. You need to think about whether or not you can handle a bigger payment or if you need a smaller payment. For some, the current payment amount may still be perfect.

You may also want to consider talking to our team about potential options for your mortgage renewal.

3. Determine Mortgage Needs

With your financial goals in mind, you need to consider what kind of mortgage you want. This means that you need to identify the terms of your ideal mortgage.

Here are some things to consider:

  • Can you make larger monthly mortgage payments?
  • Do you have money to put towards a lump sum prepayment?
  • Can you pay off your mortgage completely within the next term?
  • Do you need to borrow more money from your lender during this next term?
  • Are you going to sell your home and/or move within the next five years?
  • Evaluate your current financial situation and your mortgage needs to find the right kind of mortgage for you.

4. Get Ready for the Renewal

According to the law, your current mortgage lender has to send you a mortgage renewal statement at least 21 days before your current mortgage term is up. Usually, email you a renewal offer that already has an interest rate tied to it. This is the interest rate that the lender considers ‘good’ for 30 days prior to mortgage maturity.

By including this interest rate, the lender is actually protecting you. If higher interest rates were to become available during this 30-day period, you’re protected by the lower rate offered.

Keep in mind that this interest rate may vary if you undergo a variable rate mortgage.

Hopefully, you’ve done enough research by now that you’ll know whether these predetermined terms are good enough or not. Often, your mortgage lender is not going to give you the best mortgage rate. Remember, they are trying to make money through this deal.

If you’d like to explore your options, get in contact with us within the last 90 to 120 days of your current mortgage.

5. Finalize Your Choice

Now that you’ve done your research, talked to an expert like us, and know what your current mortgage lender is offering you, it’s time to make a decision. The biggest choice that you need to make is whether or not you’re going to stay with your current lender.

If you do decide to stay with your current lender, you can either choose to sign and return the mortgage renewal offer that they sent you. Or, you can contact us so that we can help you decide and negotiate what the best rate and term for you are.

If you decide to work with a new lender, you may find that there’s more paperwork. But, you may also find that you can get a better deal. Lenders are more likely to give lower interest rates to new clients simply because they are new and will bring in additional revenue.

You may have to submit a mortgage application and consider new criteria that your current lender did not take into consideration. You should also keep fees in mind. Some new lenders may offer free appraisal fees or free legal fees, but this isn’t guaranteed.

You should also look into mortgage switch programs and mortgage transfer programs. These help individuals move from one lender to another upon mortgage renewal. You may be able to find a free switch program at some institutions.

Mortgage Renewal With Bad Credit

If you’re trying to renew your mortgage and you have bad credit, you may find that you’re not going to have access to the best interest rates. This is especially if your credit lowered during the term of your current mortgage.

Lenders perceive bad credit as associated with poor financial decisions. Therefore, having bad credit is going to make mortgage renewal a little bit more difficult.

Hopefully, you’ve been making payments towards your current mortgage on time and in full. (This will lower your amortization period.) If so, you may have a better chance of securing a loan with your current mortgage lender.

Even if you have poor credit, your current lender can see that you’ve made your payments properly with them. Therefore, they will be more likely to trust you with a mortgage loan than a new lender.

Keep in mind that you are at risk of having your mortgage renewal denied if you haven’t been making these payments. If this happens, you need to look for a mortgage loan elsewhere.

However, if you are not able to find a loan with another lender, you may need to talk to ‘B’ lenders. These institutions focus on giving loans to individuals with poor credit.

If you’re looking to consolidate your debt while renewing your mortgage, our team can help you find a refinance or home equity loan. If you’re up for renewal, it’s the perfect time to take advantage of these kinds of loans. Plus, there is no fee for breaking the existing mortgage at the time of maturity.

How Much Can You Borrow?

Need To Access Your Home Equity or Combine Your First and Second Mortgages Into One? Get a Free Quote To See Your Renewal Options.

Mortgage Renewal With Good Credit

Your credit score matters. You are more likely to get the interest rate that you’re looking for. In fact, you might be able to get a better interest rate than you may think.

Lenders perceive those individuals with good credit as having a good financial history. This tells lenders that you are more likely to had a high payment frequency, pay in full, and pay on time.

All in all, this leads the lender to trust you more with the money that they will potentially lend you.

Those individuals with good credit are going to find a mortgage with a lender easily. These individuals will also have more options when it comes to the lender that they want.

Since they have good credit, they will be able to talk to multiple lenders. This may lead to multiple mortgage offers that they can choose from.

Overall, having good credit while you’re shopping for a mortgage is exceedingly helpful. It’s one of the biggest factors that lenders look at.

If you’re going to have a mortgage renewal soon, you should try to raise your credit score.

Mortgage Renewal With No Income

If you find yourself with no income upon mortgage renewal, you may need to consider mortgages that don’t require income documentation. Most lenders are going to ask for some sort of income proof to make sure that you can pay back the loan. However, not all lenders require this documentation.

Most likely, you’re going to have to switch mortgage lenders and talk to our team about what your options are. We can help you find the best mortgage renewal options for you.

Mortgages that don’t require income documentation are great for people who are in between jobs at the moment. However, they are notorious for carrying high interest rates.

The lender can’t tell how much money you make. Therefore, they need to protect themselves by charging higher interest rates.

Mortgage Options in Canada

If you’re approaching your mortgage renewal period, you need to take your time. Don’t rush into any agreement until you know what you want and what’s out there. You’ll have the ability to get a better deal as you do more and more research.

Luckily, you can find mortgage deals right here with Mortgage Commitment. We can help you find the best deal just like mortgage brokers do.

Plus, we have more information about mortgages in our blog.

So, get started with us today. The more information you have, the better off you’ll be.

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MORTGAGE RENEWAL RATES

Best mortgage renewal rates from top banks and lenders in Canada.

Fast Approval &Amp; Closing

120 DAY RATE HOLD

Secure the best mortgage renewal rate 4 months ahead.

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POOR CREDIT? NO PROBLEM

Mortgage renewal/switch program options for poor credit.

No Income Verification

ANY INCOME TYPE

No income verification required for accessing your equity.

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ACCESS YOUR EQUITY

It's a great time to refinance and access your equity since you have no penalties.

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How To Renew Your Mortgage

Renewing your mortgage is simple whether you have good credit or bad credit, low income or now income. We have options!

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Start With A Free Quote

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Why Choose Us For Your Mortgage Renewal?

Why Mortgage Commitment?

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We take pride in taking the time and effort to match up every individual homeowner and homebuyer with the best mortgage financing options and rates. With access to more than 200 participating mortgage lenders, there are mortgage solutions for all types of borrowers. We listen and understand your mortgage and real estate goals, and find the best mortgage terms tailored to your specific goals to save you thousands of dollars on your new mortgage.

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