As your mortgage term winds down, your next step is to know your mortgage renewal options. Here are 5 things you should consider when renewing your mortgage so you pay the least amount of money over your next term.
1. Don’t sign your renewal papers
Don’t simply sign renewal papers with your current lender! When your renewal papers come in the mail, understand that your current lender hasn’t offered you the best terms available. Don’t just sign and mail them back. To get the best deal, you must look at all your options first!
2. Interest rate
Most Canadians are conditioned to think that the lowest interest rate means the best mortgage product. Although sometimes that’s true, a mortgage is more than just an interest rate. You can save yourself a lot of money if you pay attention to the fine print, not only the rate.
3. Fixed vs. variable
Whether you go fixed or variable is a big decision. You must decide whether the rate will be allowed to fluctuate along with the bank’s prime lending rate or whether you want to lock in the rate for the whole term.
Also, consider the term length for each fixed and variable. You have lots of options: anywhere from 6 months to 10 years!
4. Breaking your mortgage
If you decide to break your mortgage early, you will inevitably end up paying a penalty. A variable rate will typically cost 3 months interest to break, whereas breaking a fixed rate mortgage can be significantly more costly, as you could incur an interest rate differential penalty.
5. Mortgage refinance
When your mortgage is up for renewal, you’re in a unique position to refinance your mortgage without incurring a penalty, so make sure you consider this option as well.
If you’ll be renewing your mortgage within the next 6 months, considering all your options is the best way to make sure you get the best mortgage for you. And remember, we are more than wiling to do all the leg work for you. For free. Just give us a call.