Financial Literacy: The Mortgage Renewal Period Offers Great Opportunities

Chances are, the mortgage products available on the market today are a little different from when you closed your financing. ~ Cait Holmes

There are many reasons for renewing a mortgage. Avoiding paying thousands of dollars for convenience is one of them. Plus, there might be a better mortgage product for your current situation. Accessing the equity in your home without penalty is another option.

Your time is important. We know it, you know it, and your lender knows it. That’s why lenders give you the option of signing and returning your mortgage renewal without having to think about it any further.

However, this is also precisely why your lender is unlikely to come up with their best offer right away; some people don’t mind a higher interest rate if it means getting one more thing on their plate.

The interest rate is usually about two percent higher on the lenders’ first offer than what can be negotiated on your behalf. With a mortgage of $ 330,000, that 2% difference makes you pay $ 30,682.14 in additional interest over five years.

In order to stay competitive, lenders need to think of innovative ways to address different situations. For example, there are products specifically aimed at first time buyers, applicants on maternity leave, people going through divorce, etc.

Chances are, the mortgage products available on the market today are a little different from when you closed your financing. The difference of a few years can also mean significant changes in your life or financial situation.

The renewal deadline is a great opportunity to ensure alignment between your current lender and your product with your current situation and future goals. It’s your broker’s job to stay up to date on product offerings and interest rates so you don’t have to. They are there to be a resource for you; do not underuse them.

There are many ways to put your home equity to work for you. Perhaps you have accumulated additional debt since you first got your mortgage. Perhaps you are considering investing in a rental property to provide a source of passive income for yourself, or you want to finally finish your basement.

Either way, the timing of renewal is a great opportunity to consider accessing equity in your property. Since the term of your mortgage has expired, you can avoid incurring repayment penalties or fees if your mortgage breaks. It can help you pay off other high interest debt or access a large influx of money to help you reach your goals.

Exploring additional options may involve several steps for your broker, which is why I recommend that you contact them 120 days before your renewal date.

Cait Holmes is a mortgage broker in the qathet area.

Louis R. Hancock