Renewing your mortgage

When your current mortgage term expires, and you sign on for a new one, this is a mortgage renewal. (Or pay off your mortgage, in which case it’s time to celebrate, as you won’t be required to sign up for another term!) This is your opportunity to renegotiate the conditions of your mortgage contract, including the length of your next term, the interest rate on your mortgage, and even your lender. At the same time, some lament that you cannot lock in your mortgage terms for the duration of the amortization period as you can in the United States. The ability to change the terms of your mortgage at predetermined intervals means that you can also adjust your mortgage. It is to better align with your changing needs since you obtained or renewed your mortgage and what is happening with the economy.

Options for early renewal

Certain mortgages include an early renewal clause as one of their terms. This is a convenient choice if interest rates begin to rise and you are still locked into a mortgage that will mature in a few months. Additionally, you may be permitted to lock in interest rates a specified period before renewal so that if rates change between then and the maturity date of your term, you will receive the locked-in rate.

Certain mortgages offer a prepayment break at renewal time, allowing you to make a lump sum payment toward your principal without paying any fees. Consult the conditions of your mortgage arrangement to determine whether this applies to you.

What Happens If I Don’t Renew My Mortgage?

If you do not renew or have plans to renew, you must look to either switch to a new lender or sell the property. Depending on the lender and the relationship with the lender during the term will impact how quickly they issue a demand notice and start foreclosure action.

Mortgage renewals allow homeowners to shop around for a new mortgage.

Thanks to online tools and resources, the average homeowner now has access to information and tips that can help them sort through mortgage renewal options. A variety of factors influence what a person can afford with a mortgage, and these needs change over time. The ideal mortgage rate when you first sign your mortgage might no longer be appropriate for your current lifestyle or financial needs. Taking the time to research your options may result in a lower interest rate and a better mortgage.

Mortgage renewals provide an opportunity to reevaluate your lifestyle and financial requirements. If you intend to stay in your current home, take advantage of this opportunity to find a mortgage rate and term that is more suitable for you. What was the best mortgage for you 10, 15, or 30 years ago may no longer be the best mortgage for your current lifestyle and needs!

With mortgage renewal think about your short-term and long-term financial goals.

Whether you sign a renewal for a two-year loan term, three-year loan term a five-year loan term or a ten-year loan term, there are a lot of things that can happen between today and the end of the term. You might have some children who will be off to college by that point, and the costs associated with that are likely to be significant. If you are considering retirement by the end of the term, that should definitely have an influence your financial future. Some other potential events – a child getting married, some upcoming promotions at work, a spouse’s decision to stay home and take care of children – can all influence how much you think you can pay per month now, and how much you will be able to pay at that point.
Consider what you need from your mortgage.