Tips for Mortgage Renewal

An important fact to highlight is that nearly 70% of mortgages never finish their term. This indicates that, for different reasons, homeowners are ending their mortgages early. Before a mortgage is completely paid off, it is required that a mortgage is renewed at least once during the mortgage term. The basic concept of mortgage renewal is that the outstanding balance of a homeowner’s mortgage is taken and then renewed for another term at a new mortgage rate.

It is recommended for homeowners to save the maturity date of their mortgage so that is easily remembered. This will allow borrowers to take proactive measures which could enable them to renew their mortgage term at a potentially lower rate. Here are few recommendations or proactive measures that can adopted by borrowers before the end of their mortgage term.

Consider Current Financial Goals

Before signing the mortgage renewal slip sent by the current provider and sending it back, it is recommended for borrowers to review their financial goals and research the market so that they could obtain a mortgage offer that would better suit their future needs. If a borrower is certain that they would stay in the house for another 5-years, then they should renew their mortgage for the same term. However, if they plan to leave early, then the mortgage term should be renewed in accordance with the intended day of leaving.

Start To Shop Around Early

Before the end of the mortgage term, it is beneficial to search for better mortgage rates approximately four months before the term ends. If a borrower is satisfied with the current lender, then they can renew their mortgage term early. On the other hand, if the borrower is not satisfied with their current lender, then they should research the market in order to find a better mortgage offer, providing the borrower with enough time to switch their mortgage to another lender.

Outline Mortgage Needs

Along with the assessment of financial goals, it is essential for a borrower to make a list of the mortgage requirements in a mortgage product. It necessary to evaluate whether your monthly budget has enough room to increase the monthly mortgage payments. You should also keep note of any inheritance or any additional income that can be utilised for the payment of your mortgage and also consider whether you have the option to pay off your entire mortgage in the following term. If you perceive that you would require additional money from your lender, then you should consider the prepayment penalties involved in a refinance or look at collateral mortgages instead.

Obtain a Rate Hold

When shopping around for a better mortgage rate, the recommended strategy is to employ the use of mortgage broker. This allows the borrower to skip going from lender to lender and with the assistance of a mortgage broker, the credit report of the borrower is obtained which then lists out the potential lenders who will work with the borrower. Moreover, the mortgage broker can easily inform the borrower of which interest rate they would qualify for, should they choose to switch lenders.