Refinancing a mortgage refers to paying off an existing mortgage and replacing it with a new one. Homeowners choose this strategy for a range of reasons, the most common being:
- Lowering one’s monthly payment to improve cash flow or free up money for a rainy day savings fund,
- Consolidating high-cost consumer debt, such as credit cards, car loans or other personal loans,
- Renovating one’s residence while taking advantage of possible federal home renovation tax credits,
- Setting up a home equity line of credit or “HELOC.” This approach allows you to withdraw funds as needed, when needed. A HELOC can be established for a one-time cost and accessed many times without the need to re-qualify, provided payments are kept up-to-date.
Whatever the reason, or if you are just looking to benefit from a lower mortgage rate, it can make sense to refinance your mortgage. One tip to remember is to understand your prepayment features of your current mortgage and whether this can be factored in to decrease any penalty incurred.
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Renewing Your Mortgage
When an existing mortgage is about to expire and you don't need to increase the loan amount or type of mortgage, it is time to renew your mortgage contract (otherwise it is called a refinance).
- Most Canadian banks will send a mortgage renewal notice in the mail usually one to two months prior to the term expiration indicating various contract extension terms and interest rates available.
- The majority of borrowers select an appropriate renewal term and rate, sign the form, and return it to their lender.
The sad reality is, the banks are well aware of our busy schedules and propensity to take the path of least resistance:
- Existing lenders tend to offer less than competitive rates at renewal hoping that we simply accept their renewal offer without researching what the competition has to offer.
- The end result is that more of our monthly payment goes more towards interest payments than need be and it takes us years longer to be mortgage free.
Remember when you applied for your first mortgage?
You asked questions, did research, talked to a mortgage broker, and found the best mortgage rates and options for your situation.
- Mortgage brokers typically can offer you the lowest possible mortgage rate available in the country.
- As the broker works for you, there is no haggling or negotiating simply because if he or she can't offer you better rates and service, they don't get your business and,
- Unlike the banks, there is no incentive or reward to the mortgage broker for making you pay more than you have to!
If you move your mortgage to a different lender, the renewal is called a switch. Many lenders offer no cost or low cost switches to better rate options. Renewing or switching your mortgage means, essentially, a fresh start and presents the perfect opportunity to re-assess your needs and make sure your mortgage suits these changing needs.
In many cases, existing lenders will insist that moving your mortgage to another institution will cost you money, but this is NOT the case. Mortgage renewal is big business and very competitive. Many lenders will pay for all renewal expenses including:
- Legal costs
- Appraisal
- Property title insurance
- Transfer fees
Let's Get Started
As professional mortgage brokers, we can clearly explain the renewal or refinance process and access a vast network of mortgage lenders to find you the right mortgage at the right rate for your renewal.
Effort on your part is small and the reward of being mortgage free years earlier, well worth it.
Complete your Mortgage Renewal Application or call 1.888.540.1715 option 1 and begin the process today.
Also, make sure to download your Free Guide: Renewing and Renegotiating Your Mortgage.