Life can be hectic and many of us get lost in the hustle and bustle of everyday living. There never seems to be enough time in the day so many of us will make choices based on convenience as opposed to making decisions that best reflect our individual needs.

This typically means that we end up paying a little more because we simply cannot afford the time or the effort required to make the best choices. However, this type of thinking and decision making can be quite costly, especially when it comes to renewing your mortgage.

Most lenders and banks take advantage of their client’s need for convenience by sending mortgage renewal notices in the mail a few months prior to the mortgage term closing. These renewal notices are typically the bank’s posted rate with minimal or no discounts. The lenders assume that their clients will sign on for another term simply because they have made the renewal process that much easier and more convenient.

Well guess what? The lenders are right because more than 50 percent of home owners will sign and return the renewal form without giving it a second thought. At SaskEquity we encourage you not to become one of those home owners because you should give your mortgage renewal a lot of thought.

Do you remember when you first applied for your mortgage? You were full of questions and you looked for the answers. You did the research, compared rates, and possibly even sought advice from a professional mortgage broker.

So, why renew your mortgage without giving it the same careful consideration? Our qualified and professional mortgage brokers at SaskEquity are here to provide you with expert advice and to offer you our vast resources so you can find the most competitive mortgage rates available today.

Re-evaluate Your Circumstances Before You Renew Your Mortgage

Life can change rapidly. If you have a mortgage term of 5 years – there are many different term lengths, so it may not be this – a lot can change over that time. People get raises. They also lose their job. So many factors play into our lives that a reassessment is needed when renewing the mortgage on your home.

Income

The first thing to do is look at your income. Where does it stand compared to when you first started the current mortgage term? Are you making more than you did then? Less than before? Have you lost your job entirely? Income stability is important when it comes to owning a home.

If you have lost your job, for instance, you may not want to change lenders. Doing so opens you up to reapply with a new lender and, your new circumstances may not qualify you for a mortgage with them. Understand your income situation first and foremost.

That’s not to say that you can lose a steady income and remain on your current terms. The difference here is that you don’t need to requalify; you may still wind up with a higher interest rate if your financial situation has changed exponentially.

Expenses

After assessing your income, it is time to look at expenses. Have they changed significantly over the last five years? Again, a lot can happen. People get married or have kids (more on that later), develop hobbies, buy a car, etc.

Expenses can and usually do change over time. Reassessing your finances and restructuring your budget are important to the renewal process. Perhaps you are spending far more than you were five years ago. Knowing that is essential.

Investments

Investments also need to be taken into consideration. Perhaps you weren’t investing in any substantial way back then. But time can change that. Much like investing in the stock market, there is risk involved in purchasing a home. It could gain or lose value depending on a variety of factors.

Has your financial risk level changed? Do you find yourself being more aggressive or conservative than you were at the beginning of the term? Even if your investments are fine now, using a risk-heavy strategy can lead to potential losses. Will you be ready to shoulder those losses, or will it cause major damage in other areas of your life?

Start Shopping Months Before Your Mortgage Renewal

If you are in the final year of your term, don’t wait until the final minute to shop around for better rates. Know when your term’s maturity date is, and then count back four months (120 days). Four months is the amount of time you should give yourself to weigh every option and decide the best course of action.

Should your current lender provide the best rate options, renewing early with them is possible. Just check to find out if there are any prepayment penalties to be aware of. If you aren’t ready to make a decision, that window at least gives you the time to do your research.

Using your financial information and credit score, you can begin shopping around to see what your mortgage options are. There is certainly the chance that another lender could offer a better rate. But you won’t know without looking into it.

Use the time wisely. Compare lender offers on mortgage rates. Look into prepayment options. Know what the terms and conditions are and even see if you can get offers from other lenders. The more information that you have, the better armed you are to negotiate with your current lender.

Giving yourself options is never a bad thing, particularly with a mortgage. So do just that by shopping around well in advance of your renewal date.

Things to Be Aware of When Switching Lenders

All that said, it may not be as simple as switching lenders. There are a few factors to keep in mind before switching your lender. Being aware of these can weigh into your decision and keep you from being blindsided later in the process.

Costs to change

There are costs for changing lenders in most cases. If you are considering switching lenders, as about the following:

• Any setup fees, which includes things like mortgage discharge, transfer, registration, and assignment fees when making the switch from your current lender
• If necessary, an appraisal fee to confirm your home’s current value
• Administration or legal fees

You can also ask the lender if they will cover some or all of those costs. If you are a highly trustworthy borrower, they may be willing to cover those fees to get you under contract. It never hurts to ask.

Mortgage Loan Insurance Premiums

The fees can be costly enough before even taking into consideration the mortgage loan insurance premiums. A borrower would have to pay for a new mortgage loan insurance premium under the following conditions when switching to a new lender:

• You extend your amortization period
• The total of your loan increases

Should you already have mortgage loan insurance attached to your current loan, make sure to inform the new lender. Without saying anything, you could wind up paying that premium twice. You can verify this by asking the current lender for the certificate number. They should be able to provide you with a copy of your insurance certificate when they deliver the mortgage contract.

Keep in mind that you will need to sign registration documents that are part of the mortgage contract. Meeting with a notary or lawyer may mean additional legal fees, so ask ahead of time.

Take a Look at Your Goals Before You Renew Your Mortgage

Just like personal circumstances can change over the term of your mortgage, so too can financial goals. Before agreeing to a mortgage renewal, consider what you want to do financially over the coming term and beyond.

The goals for your home can change substantially as well. Perhaps when you first got the mortgage, finances were tighter. But now, you have the flexibility to make more payments. If so, will your renewal accommodate making more payments so that you can be mortgage-free in a shorter period of time?

There is also the case to make for repairs or renovations. Just like anything else, homes can wear over time. Things need to be fixed or replaced entirely. Will you have the funds to perform those repairs or renovations?

Financial goals can also include travelling and other major expenses. If you have major events on your bucket list that you want to cross off, having a mortgage that fits your financial goals is key. Getting stuck with a more expensive rate can hamper your ability to live the life that you had previously envisioned.

There are even instances of coming into a large sum of money since the last term. Inheritance, lottery winnings, and a variety of other things may happen. If you decide to, can you put that large sum towards the principal of the mortgage without prepayment penalties and fees?

What about if you move? That would require a mortgage that is portable and is limited on the number of fees to deal with. As you can see, there are major factors at play when it comes to renewing your mortgage and ensuring that you are getting the very best mortgage for your needs.

Contact SaskEquity Today if You are Renewing Your Mortgage

There are plenty of questions to be asked about Canada’s mortgage renewal process. If this guide leaves you with more questions than answers, that is okay. The first step is to reach out to SaskEquity.

Our team of mortgage professionals can help answer those questions promptly. A home is the largest purchase that most Canadians will make in their lifetime. It only makes sense to go into the process as knowledgeable and confident as can be.

SaskEquity helps make the process easier for you. When it comes to your mortgage, getting the best rates is imperative. Don’t get stuck in a mortgage that doesn’t fit your needs the best that it can. Know your options and what is needed to get the best rates, be it from your current lender or another.