Renewing mortgage is one of the easiest steps involved in any mortgage process. You simply choose the renewal rate and corresponding term (1-5 years) and submit the completed form back to your existing institution. Typically renewing mortgage does not involve any additional expenses, however it is up to the lender to determine if there would be a “renewal fee” or not. Keep in mind that once your mortgage term has matured, you are no longer in a contract with your bank and therefore, the bank may decide to request things like a renewal fee or an appraisal to confirm the value of the property.
Having said that, when it comes to renewing mortgage, there are a couple of things to consider:
- Before re-signing into another term, it is highly advisable to compare the offer to those outside the institution that holds your existing mortgage
- Re-evaluate your short-long term financial/life goals
- Consider consolidating any outstanding debts
When your existing mortgage is due, it is wise to look at what’s being offered out there, especially if you have been in a fixed term mortgage for 5 years. You may find that the renewal offer does not compare with the market rates that are available from the competitors. At this point, you would want to start by trying to negotiate with your existing bank to get the best possible offer. If you are unhappy with the result, you can always refinance your mortgage elsewhere. Keep in mind that unlike renewing your mortgage, refinancing does involve costs such as appraisals and legal fees. These additional cost in turn, may offset the gains you would expect from a lower rate.
Re-evaluating your short-long term goals are also an important factor to consider. Since life is in constant evolution and changes, you may have goals that need to line up with the mortgage terms and this forethought should be considered prior to locking into any length of term.
When its around the time to renewing mortgage, its worth considering the idea of consolidating high interest debts into your mortgage payments. This is done by refinancing your existing principal and increasing it to the amount required to payout the unsecured debts. This strategy can be very effective in eliminating the overall debts sooner and increasing your cash flow at the same time.
If you would like to learn more about renewing mortgage or if you have any questions, please feel free to contact us today!