Jan
18

Renewal Time!

Ok, so it’s been a few years and you’ve been busy hammering away at your mortgage principal and now it’s time to renew your mortgage. This post will share some myths, insights, and ideas I have when discussing renewals with clients.

First of all, renewal time is your best chance at getting the best deal without any cost. Whether you went fixed or variable, short- or long-term amortization, the lender you’re with now knows full well you may not shop your deal around therefore they will offer you an average and mediocre rate. If you fail to sign up and do anything about it, they’ll offer you an even worse rate: the dreaded convertible option. This means they will fix your mortgage, apply high penalties to leave, but give you the option of picking another term with them at anytime, without cost. Let’s face it: lenders salivate at offering high-rate renewals because they know the great majority of people are too lazy to change their lender. Don’t be that person! Shopping a mortgage renewal is extremely easy and simple and best of all, free*.

Second, if you want to refinance, doing so at renewal will save you on any mortgage penalties and oftentimes there are no legal fees involved either - depending on the new lender you pick. Some lenders offer “free refinance” options where they pick up the legal tab. Heck, I even do it for some clients (especially returning ones) as a way of showing my appreciation for their loyalty. So if the post-holiday Visa bills have you down, consider refinancing during your mortgage renewal to wipe away high-interest debt and start fresh.

Third, here’s a common myth I hear, if you renew with your existing lender you do not need to “requalify” or, prove income. A renewal without any changes is a simple sign of the paper and go. It is very rare for a lender to inquire about your financial picture unless you wanted to refinance, or, move properties. There are even some lenders that won’t ask for income documentation from you at renewal time even when making a lender change.

Finally, renewals take a little bit of time so plan and act wisely. Don’t leave it to the last minute. So many times I get phone calls from clients with less than a month left in renewal. The process is simple but time-consuming. Often what holds things up is the existing bank or lender will not issue the mortgage paperwork until the last minute as a ploy to get the client (you) to stay. Not very professional or fair if you ask me! However if time runs out you have some options: some lenders will offer you a fully-open mortgage (but not all so check with your lender). Otherwise, you can refinance the mortgage very fast (usually 7-10 days) and then get the closing date to not exceed your maturity date.

Voila!

Best piece of advice is to shop the renewal around and compare what you’re getting outside of your lender’s options, to ensure you’re getting the best possible deal.

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