What is the renewal process?
Your current mortgage lender will send you a statement of renewal at least 3 weeks prior to the termination of your current mortgage term. The renewal statement you receive will include your current mortgage terms of agreement. The fact that this is a mortgage renewal should not deter you from researching for the best possible deal to suit your current needs (you should speak with a mortgage broker for advice). A mortgage renewal is basically a new beginning. If you decide to switch you will have to close your mortgage and take out a new one. It’s a great way to re-examine your needs and find a mortgage that works better for your current lifestyle. Your current lender will be willing to negotiate to a certain extent. With the low interest rates these days it will be beneficial to change your agreement.
It’s advised to start researching for better mortgage deals around four months before the end of your term. Be prepared because if you don’t take charge to renegotiate your mortgage loan it may be automatically renewed for you and you will not be able to benefit in lower interest rates and better conditions for your current situation.
You will need to take a look at your needs and ask yourself some questions about your mortgage payments:
- Do you want to change the frequency of your mortgage payments?
- Do you have the budget to increase the frequency of your mortgage payments?
- Do you have the financial ability to make prepayments?
- Are you satisfied with your current mortgage agreement
Do you have to stay with the same lender?
It’s important to note that you do not need to stay with the same lender when you renew your mortgage. If you find an institution that offers you something that better suits your needs you should go with them. However, when you switch lenders you are starting a new mortgage process with a new institution. This means that you may incur costs such as legal fees and other administration fees.
Consider dealing with a mortgage broker who can offer different rates and agreements from different lenders. Usually this results in better mortgage rates and more savings for you.
Be proactive and you can improve your mortgage situation by shopping for better rates and agreements before signing your renewal.