What’s a mortgage renewal? What effect does it have on your ongoing mortgage? Can you get a better deal when you renew your mortgage? Finding the answers to these and other questions can give you not just a better understanding of mortgage renewal, but provide you with more options for your mortgage and finances.

Mortgage renewal, simply put, is when your current mortgage reaches its maturity date and you still need to pay any outstanding balance on the loan or debt. If your loan or mortgage has already reached its maturity date and you’re unable to settle the full amount, you’ll need to renew your mortgage.

Here are important things you need to know about renewing your mortgage.

Why You Need to Renew Your Mortgage

When you apply for a mortgage with a lender, a bank or any other financial institution, you’ll enter into a contract, in which you will need to pay what you owe to a lender, within a specified time period. This is called a mortgage term. A mortgage term can last for a month, a couple of months, a year or several years – all of which will depend on what’s stated in your contract.

If you’re unable to fulfill your obligation upon reaching the maturity date stated in your contract, you’ll have an outstanding balance. A good example of this is when you have a loan scheduled to be fully paid with a mortgage term of five years, but you’re unable to fully pay the loan upon reaching the maturity date. Incurring an outstanding balance will put you in a position to refinance your loan and apply for a mortgage.

What’s a Mortgage Renewal Statement?

In order to renew your mortgage, you have to comply with a few required documents, that will help support your application. This will allow you to process your mortgage renewal with ease and efficiency. Upon applying for a mortgage renewal, a bank or lender issues you a mortgage renewal statement.

A Mortgage Renewal Statement is a document provided by the lender to the borrower, which states the following:

  • Balance – this is the remaining loan or debt to be paid within a mortgage term;
  • Interest Rate – the interest rate stated and agreed upon in the mortgage term;
  • Payment Frequency – how often you pay your lender varies depending on whether you want to pay weekly, bi-monthly or monthly;
  • Term – the amount of time in which the mortgage has a legal effect. It can be in months or years, depending on the agreement;
  • Fees – additional payments needed, or costs incurred for processing a mortgage renewal application

A mortgage renewal statement is an important document for the borrower. It keeps the borrower aware of the status of his or her mortgage, such as the current balance, current interest and the number of payments still to be paid.

Shopping for Better Rates

This is an important piece of information: you don’t necessarily need to renew your mortgage with the same lender. A good strategy to apply is to talk to your broker before approaching other lenders.

If your current lender offers you something that is beneficial for you, why not stay with them? It saves you the hassle of applying for a mortgage with other lenders. But if other lenders can give better rates, the hassle of switching could be worth it. Remember, you’re looking to pay off your debt at your own pace.

Having options in renewing your mortgage widens your approach. Start shopping around a few months before your mortgage term ends. The best way to tackle your financial woes is by being prepared.

Get in touch with your mortgage broker. He or she can provide important information that will help you decide which way to go.

What Does It Cost to Change a Lender

Transferring to other lenders for your mortgage renewal is not a walk in the park. You risk being declined. Aside from that, you need to go through the hassle of transferring. Changing lenders may be beneficial for you, but there are cases when it won’t. Doing your research can definitely be the game-changer. Doing your due diligence can also make changing lenders an advantage for you.

Aside from the risk that you may incur, there are also some costs that you should be aware of. Applying for a mortgage renewal with a new lender involves a setup fee, which covers:

  • a discharge fee from your current lender;
  • a registration fee and legal fees;
  • an appraisal fee, to verify the value of your property.

There are also other administrative fees that need to be settled in order to proceed with a new lender.

If you’re transferring to a new lender, ask them if they’re willing to shoulder or waive some of the fees. In this way, you’re trying to bring new business to them, by availing of their services.

Changing your lender also means being subjected to a collateral charge. If your mortgage is registered with a collateral charge, you may have to pay fees to cover the removal of charges from your current mortgage to register a new one.

Still unsure whether to stay with your current lender or move to a new one?

When in doubt, talk to an expert.

Daisy Raouph’s expertise specializes in mortgage solutions and financial services. With over 30 years of experience as a Mortgage Broker and Financial Security Advisor, she and her team can assist you and clarify any concerns that you are unsure of, whether it’s about a mortgage renewal or other property-related inquiries.

Want to remove financial burdens off your back? Book an appointment now and start the journey to a stable financial life.

What to Know Before Your Mortgage Renewal, Mortgage Renewal, Mortgage Broker in Ajax, Pickering, Durham Region, GTA, Ontario, Canada