Mortgage renewal involves signing a new contract with your lender once your current term ends. The process includes selecting new terms, such as interest rate, term length, and payment schedule. Lenders typically send a renewal offer several months before your term expires, but simply accepting it without exploring other options could mean missing out on potential savings.
Key Considerations for Mortgage Renewal
Start Early: The renewal process usually begins around 120 days before your current term ends. Use this time to assess your financial situation and research market rates.Compare Offers: Research and compare rates from different lenders. If you find a better deal, switching lenders might be a smart move.
Consider Early Renewal: Some lenders allow early renewal, letting you lock in a new rate up to 120 days before your current term expires. This can be beneficial if interest rates are expected to rise.
Check Your Credit Score: Banks may check your credit score during the renewal process, though it’s not always mandatory. A strong credit score can help you secure a better rate.
Understand the Risks of Not Renewing: If you fail to renew your mortgage, it may automatically shift to an open mortgage, which typically carries higher interest rates. While open mortgages offer flexibility in paying off the balance without penalties, they can result in substantial interest costs if not managed carefully.
Tips to Secure the Best Mortgage Renewal Rate
· Start the process early to avoid last-minute decisions.· Review your credit score and improve it if needed.
· Use mortgage calculators to estimate costs and savings.
· Compare different mortgage options to find the best fit.
· Negotiate with your current lender; they may offer better terms to keep your business.
· Explore offers from other financial institutions to leverage better deals.
With careful planning and informed decision-making, you can maximize your savings and ensure that your mortgage renewal aligns with your financial goals.