Many Canadians automatically renew their mortgages when their terms are up rather than shopping around for a better offer. If you find yourself in a different financial situation, you should consider your options.
It’s likely that your mortgage isn’t the greatest option for your present circumstances. So, think about looking around for the greatest offer rather than just renewing your mortgage automatically. Either you could pay off your mortgage faster by freeing up more capital, or you could lower your monthly mortgage payment with renewal or transfer.
Keep these tips in mind when it’s time to renew your mortgage:
- Do Not Sign the Auto-Renew Letter
Your ability to bargain with the lender is forfeited if you sign the renewal letter. Additionally, if you don’t get in touch with your lender, your mortgage can be automatically renewed for a different term, and you might not receive the best terms and interest rates. To bargain for a better mortgage deal, then, get in touch with your lender or mortgage broker first.
- Select A Lender With Whom You Feel At Ease
Staying with the same lender can save you from taking a stress test when it comes time to renew your mortgage. But if you move lenders, you could have to, which might make it challenging for certain borrowers to do so. Take into account the lender’s standing, interest rates, fines, and prepayment flexibility.
- Take Care of Your Credit Report
Try to keep your credit score high in order to be eligible for reduced interest rates, as mortgage interest rates are determined by the borrower’s credit score. For lenders to perceive you as a low-risk borrower, make on-time payments and stay out of debt.
- Complete the Stress Test Prior to Loan Application
It may be more difficult to pass the stress test if you have additional debt. You might also be unable to transfer lenders in order to get a better deal if you don’t pass the stress test. Therefore, wait to apply for a loan until after you have renewed your mortgage and passed the stress test.
- Settle Your Debts Before Renewing
Reducing high-interest loans and obligations will raise your credit score. Lenders will view you as low-risk as a result, and you will be eligible for cheaper interest rates. Reducing debt also makes it easier for you to pass the stress test for a mortgage. Therefore, if you intend to pay off any debt, try to do it at least two months before it’s time to renew your mortgage.
Conclusion
When it comes to extending your mortgage, you have choices. Although it’s simple to have your mortgage automatically renewed, you might not be receiving the best rate possible for your particular financial circumstances.
If you are planning renewal or mortgage transfer in Abbotsford, rely on none other than Sandhu & Sran Mortgages. We are your local mortgage brokers assisting homeowners in getting access to the best mortgage renewal in Abbotsford.