Mortgage Renewal Tips

Seventy percent of Canadians don’t shop around when it comes to around to mortgage renewal time. They simply renew their mortgage with their current lender. This means you lose out on a chance to reduce your interest rate and you may be stuck with a mortgage that might not be optimal for your situation.

Renewing your mortgage gives you a chance to start over. Your existing mortgage is discharged and you enter a new one, one with a better interest rate or better lump-sum repayment terms. Here are some tips that can help you when it’s time to renew your mortgage.

Don’t wait – Start to research the mortgage market three or four months in advance of your mortgage renewal date. This gives you time to research the market to make the best decision. If you wait until the bank mails their mortgage renewal notice, you won’t have the time you need to make the best choice.

Pay down the principal – When your mortgage is up for renewal, it is a great time to put as much as you can afford towards the principle. Since your renewed mortgage is a brand new one, paying down the principle will help reduce the interest you pay over time.

Negotiate the fees – There is a discharge fee of $150 to $300 charged by your existing mortgage lender for switching your mortgage over to a new lender. If you ask for the lender to waive this fee, they often will. Failing that, your new lender will often cover the fees associated with switching. Your new lender might also ding you with some fees, including administrative and legal.

Make sure it is worth it – Not only are there fees involved, but renewing your mortgage with a new lender can be a headache. Since it is a new mortgage, you will have to jump through the usual hoops, proving income and getting your credit checked. Be sure to price out exactly what your renewal will cost you – and save you.