Your lender will likely send you a mortgage renewal document approximately three months before your renewal date (the date your current mortgage term ends). While the convenience of signing and forgetting about it for another few years can be tempting, mortgage savvy homeowners know that taking the time to review their situation and re-evaluate their options is almost always worth it. Below are three reasons you should talk to your broker before signing your mortgage renewal.
Reason 1: To avoid paying thousands of dollars for convenience
Your time is important. We know this, you know this, and your lender knows this. That’s why lenders offer you the convenience of signing and returning your mortgage renewal without having to put any extra thought into it. However, it is also precisely why your lender is unlikely to put forth their best offer straight away; some people don’t mind a higher interest rate if it means getting one more thing off of their plate.
However, the interest rate is generally about two percent higher on the lenders first offer than what can be negotiated on your behalf. With a mortgage of $330,0000, this two percent difference results in you paying an extra $30,682.14 in interest over the course of five years.
The math is simple. If a 30 minute conversation is worth potentially saving thousands of dollars, call your broker.
Reason 2: There might be a better mortgage product for your current situation
In order to stay competitive, lenders need to think of innovative ways to cater to different situations. For example, there are products geared specifically towards first-time homebuyers, applicants on maternity leave, people going through a divorce, and more. Chances are, the mortgage products available in today’s market look a little different than when you completed your financing. The difference of a few years can also mean significant changes in your life or financial situation.
Renewal time is an excellent opportunity to ensure alignment between your current lender and product to your current situation and future goals. It is your broker’s job to stay up-to-date on product offerings and interest rates so you don’t have to. They are here to be a resource for you - don’t underutilize them!
Reason 3: You can access the equity in your home penalty-free
There are many ways you can put the equity in your home to work for you. Maybe you’ve accrued additional debt since you first got your mortgage. Perhaps you’re considering investing in a rental property to build a passive income stream for yourself, or you’d like to finally get around to finishing your basement.
Whatever the case may be, renewal time is a great opportunity to look at accessing the equity in your property. Because your mortgage term is up, you can avoid incurring any payout penalties or fees for breaking your mortgage. This can help pay off other high-interest debts or access a large influx of cash to help you meet your goals.
Exploring additional options can involve several steps for your broker, which is why we recommend reaching out to them 120 days before your renewal date. If you’re already an Innovative client, we will reach out to you six months, four months, and two months before your mortgage term is up. If not, we are happy to review your renewal offer even if you didn’t originally get your mortgage through us.
Contact our office to ensure you’re getting the most out of your renewal today!