Mortgage Renewal Guide: How to Get the Best Rate
Your Mortgage Renewal Opportunity
When your mortgage term ends, you have a valuable opportunity to reassess your mortgage and potentially save thousands of dollars. Many homeowners simply accept their lender's renewal offer without exploring other options—a costly mistake that could impact your finances for years to come.
When to Start the Renewal Process
Don't wait until the last minute. Start reviewing your options at least 4-6 months before your renewal date. This gives you time to:
- Shop around for better rates
- Negotiate with your current lender
- Consider switching lenders if beneficial
- Review and adjust your mortgage terms
Understanding Your Renewal Statement
Your lender will typically send a renewal statement 30-120 days before your maturity date. This statement includes:
- Current mortgage balance
- Proposed interest rate
- New payment amount
- Term options available
Important: The rate offered is often negotiable and may not be the best available rate, even from your current lender.
Key Questions to Ask During Renewal
1. Is the Offered Rate Competitive?
Compare your renewal rate with current market rates. Even a 0.25% difference can save you thousands over your term.
2. Should You Change Your Mortgage Type?
Your circumstances may have changed since your last term. Consider whether fixed or variable better suits your current situation.
3. Should You Adjust Your Amortization?
If your financial situation has improved, shortening your amortization can save significant interest. Conversely, extending it can lower monthly payments if needed.
4. Do You Need Different Features?
Consider features like:
- Prepayment privileges
- Payment flexibility (weekly, bi-weekly, monthly)
- Portability options
- Ability to increase payments
Negotiating Your Renewal Rate
Your current lender wants to keep your business. Use this to your advantage:
- Get Competing Quotes: Obtain rate quotes from at least 2-3 other lenders
- Present Evidence: Show your current lender the better rates you've found
- Be Prepared to Switch: If they won't match competitive rates, be ready to move your mortgage
- Negotiate Terms Too: Don't just focus on rate—terms and features matter
Should You Switch Lenders?
Switching can be worthwhile if:
- You can get a significantly better rate (typically 0.25% or more)
- You want features your current lender doesn't offer
- You're consolidating debt
- You need to access home equity
Costs to Consider:
- Appraisal fees (often covered by new lender)
- Legal fees (sometimes covered by new lender)
- Discharge fees from current lender ($200-$400)
Many lenders will cover switching costs to earn your business, making it a cost-neutral decision.
The Power of Early Renewal
Most lenders allow you to renew up to 120 days early. This can be advantageous if:
- Current rates are favorable and you want to lock them in
- You expect rates to rise before your maturity date
- You want to blend and extend your current rate
Common Renewal Mistakes to Avoid
- Auto-Accepting Your Renewal Offer: Always shop around
- Focusing Only on Rate: Terms and features are equally important
- Waiting Until the Last Minute: This limits your options
- Not Reviewing Your Financial Situation: Your needs may have changed
- Ignoring Prepayment Opportunities: If you can afford it, increasing payments saves interest
Renewal Checklist
Before your renewal date:
- ☐ Review your current mortgage details
- ☐ Assess your current financial situation
- ☐ Research current market rates
- ☐ Get quotes from multiple lenders
- ☐ Calculate potential savings from different options
- ☐ Negotiate with your current lender
- ☐ Review all terms and conditions carefully
- ☐ Make an informed decision well before your maturity date
Let Us Help You Maximize Your Savings
Mortgage renewal is a significant financial decision that deserves careful consideration. A mortgage professional can help you navigate your options, negotiate on your behalf, and ensure you're getting the best possible terms.
Your renewal date approaching? Contact us today for a complimentary mortgage review and discover how much you could save with the right renewal strategy.