RENEWING YOUR MORTGAGE
You are now a home owner, you have settled into the new place and before you know it, your mortgage is up for renewal! What do you do……
Well, a common mistake we find is that most people just go back to their existing mortgage lender and sign a renewal, but wait… there are a few things you should check off your list before you sign. Below are steps on how to be a better educated mortgage consumer.
A Client with a maturing mortgage has 2 options.
1) Renew mortgage with existing bank.
2) Renew mortgage at a new bank.
Go into your existing bank and (depending on your bank) you will be able to EARLY RENEW your mortgage 60-90 days before the maturity date. The bank will offer you a rate at that time and you will have a decision to make.
YES– You like the rate and you sign the renewal documents. Your mortgage is renewed and your rate is locked.
NO– You don’t like the rate and you wait for rates to drop because the maturity date is still 90-120 days away.
WHAT CAN HAPPEN? If you said….
YES and rates go up, GREAT!! You locked in a lower rate.
YES and rates go down, BAD!! You locked in a higher rate.
NO and rates go up OR down – YOU have to watch the rates DAILY and GUESS when is the best time to lock in those rates. When you decide to say YES, you will sign the renewal agreement and hope rates don’t go down prior to your maturity date.
Speak to a Mortgage Planner that can HOLD A RATE for you. The rate will be held for 120 days.
(That is 4 months BEFORE your mortgage matures).
WHAT CAN HAPPEN?
RATES go up, GREAT!! You locked in a lower rate and on the maturity date of your mortgage you will get the LOWEST RATE that was available in the last 4 months prior to your maturity date.
RATES go down, GREAT!! You did NOT renew your mortgage and did NOT sign the renewal agreement; therefore you still get the LOWEST RATE that was available in the last 4 months prior to your mortgage maturity date.
WHAT DO YOU HAVE TO LOSE?
NOTHING– Speak to your Mortgage Planner to HOLD THAT RATE.