Renewing Your Mortage? What You Need To Know Part Two

As I wrote previously, the time to start the mortgage renewal process is at 120 days prior to the end of the term.   A 30 day period works great for your present lender, but it will be  you who will be paying for years for this convenience.   It’s definitely worth the time and diligence to put in some time into who and what mortgage lender is willing to offer you the best deal.

A Step by Step Approach

  1. Why 120 days?   The reason is to secure the best interest rate within a 4 month window.  What you are getting is a written guarantee of a lender’s best interest rate.   We all know that interest rates fluctuate, and if rates go up you keep pre-approved rate and if they rates drop you then get the lower rate upon your renewal date.  Think of it as hedging your bet and lots can happen in 120 days as opposed to 30 days.
  2. Ask for their best rate! By asking the question any lender will drop their rate from what’s posted.
  3. Styles change and most of us are not wearing the same clothes we had 5 years ago.  So the same goes with mortgages.  Variable, fixed, open, closed, 1 year, 5 years decide what best works for you.  Remember ,what worked for you in your present mortgage may not be suitable for your next one.
  4. I am committed to my wife, but I don’t have the same loyalty with a financial institution.  You can keep your regular banking with one and have your mortgage with a different lender.  For example, my regular banking is with TD but my mortgage is with CIBC.
  5. Your mortgage holder will try play the there will be discharge fees if you move your mortgage.  Not to worry, if you move it to another lender they will be more that willing to pick up those costs to secure your business.
  6. At renewal is a great opportunity to refinance in order to pay of other loans/lines of credit, take on a renovation or help with the costs of university education for the kids.
  7. Keep your payments the same or increase them, but what you want to avoid is lowering your payments.
  8. Remember there are lots of financial institutions in the mortgage business so don’t limit yourself to just the big banks.  Talking to a mortgage broker is great as they can do a lot of the heavy lifting for you in getting the best deal.

The biggest advice I can give is you want to pay off your mortgage as soon as you can.   In our 30’s and 40’s we are have our health and for most have a solid earning potential.  Use this window to pay down the mortgage, as imagine the freedom when you are in your 50’s and being mortgage free.