The Advantage of Early Renewals
A recent survey by the Canadian Mortgage and Housing Corporation (CMHC) found that 60% of Canadian mortgages were renewed before the scheduled date. Here are two good reasons why you should consider renewing your mortgage early: lower your mortgage rate and get ahead of any rate increases.
The bottom line is that early renewals may save you a lot of money. Homeowners know that over the life of a mortgage that rate increases are likely at renewal. The past six years have been an exception and may not continue indefinitely, which is why it's a good idea to review your options now. Interest rates in the US are expected to rise this Fall and that could put upward pressure on Canada's rates. It's something we've heard often over the past few years and rates have remained the same. However, by renewing early, you are at least covered, if and when rates do to start to rise.
Buying your home was the biggest financial decision you made and you shopped around for the best mortgage product to suit your needs. Deciding to renew early is also a good time to shop around, for a number of reasons: Your current lender may not offer the best renewal rate; your financial situation may have changed and you may need to refinance; your goals may have changed and you may want to access equity for investment purposes. There are any number of scenarios that would necessitate an early renewal.
But where do you start? In CMHC's survey, 55% of homeowners said they renewed early to avoid rate increases; however, less than half of them negotiated the terms with their current lender. Your lender will send your renewal documents approximately six months before renewal, which gives you time to do some research.
Working with me can help. A broker will review your situation with you and offer options to help you make informed decisions for short term and long term goals.
Here are a few more highlights from the CMHC survey:
61% said they were "totally satisfied" with the decision to renew early
49% of those renewing set their payment higher than the required minimum
32% made a lump-sum payment, increased their regular payment or did both since their previous renewal
To find out your options at renewal time or earlier, call me today. Let's review your situation and get you the best possible mortgage deal.
