Tips on renewing your mortgage

How to get the best rate

One of the most costly mistakes when renewing a mortgage is to not looking at all the options. Both blindly signing a renewal statement, or not signing one at all, and allowing the mortgage to renew automatically, can be costly.

Here is what you need to know when it comes time to sign on the dotted line, again:

Start looking 13 months before your mortgage renewal date

Depending on your mortgage lender, it may be beneficial to renew or switch lenders more than a year in advance. A low rate for a one- or two-year term can, in many cases, be more financially beneficial than riding out the last year of a current mortgage at a higher rate, even if you have to pay a penalty. Secure rates at least four months before renewal date

Most banks and mortgage brokers can secure a rate up to four months at a time. In the event rates start to rise just before the mortgage comes up for renewal, having that grandfathered rate can save you thousands of dollars. It's also a good idea to secure rates with both your existing lender and a competitor.

Do not accept the bank's first offer

In almost all cases, the bank will try to fleece you if it can. Borrowers have more negotiating power upon renewal than they did when they first got their mortgage.

Know your options

Even if you have been a client of the same bank for your entire life, a consultation with an Accredited Mortgage Professional (AMP) or mortgage broker will save you money. Renewal time is a great time to compare what other lenders are offering with respect to rates and product features.

Many borrowers realize at renewal time that their original mortgage is no longer suited to their needs, or that other lenders offer solutions that may not have been available when they first got their mortgage. Without a consultation however, most borrowers never realize this.

The best advice is to treat a mortgage renewal as if you were buying a new vehicle. Rather than just buying the newer model of the same vehicle from the same manufacturer, it makes sense to take a look at what else is available on the market. You may just find a vehicle – or in this case, a mortgage – that suits you better.

Nolan Matthias holds a bachelor of arts in Economics, is the co-founder of Mortgage360 and the author of The Mortgaged Millionaire. Call Nolan at 403-615-6132 with your questions or to set up an appointment with an Accredited Mortgage Professional (AMP).

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