How Does Mortgage Renewal Work?

Feature, Mortgages

20th Oct 2015

At Vertuity Mortgage, one of the most common questions that we hear from our clients is how the mortgage renewal process works. Simply put, whether your mortgage comes up for renewal in 35 months or 10 years, the renewal process provides you with an opportunity to re-evaluate your personal financial situation and mortgage needs before you decide on a new mortgage product.

Leading up to your mortgage renewal, you will receive a notice in the mail from Vertuity Mortgage to notify you that your mortgage is coming due. One reason why our mortgage brokerage firm is so attractive to our clients is that we have the ability to lock the interest rate for your renewal as early as 4 months out (120 days), which is something that many financial institutions are not able to offer to their clients. By offering a 120 day rate guarantee, we are really able to set ourselves apart from others in the industry and provide our clients with peace of mind during the renewal process.

During your renewal period, you have a chance to renegotiate your interest rate and term for your mortgage. Being a mortgage broker, one of the things about Vertuity Mortgage that makes us unique is that we will shop your renewal to over 20 lenders that will all put their most aggressive offers together in an attempt to win your business. If you decide to transfer your mortgage to a new lender during this renewal period, it will not cost you anything as the new lender will cover all of the costs to transfer the mortgage.

If you are considering purchasing a new home and are trying to weigh the pros and cons of the various mortgage options available to you, it is important that you understand how themortgage renewal process works before determining a maturity for your mortgage.

Mortgage interest rates are priced based on risk, so typically the longer the term of your mortgage, the higher the interest rate will be. Mortgage rates in Canada still continue to be at historic lows, meaning that if you lock in on a mortgage with a shorter term, you are likely to receive a rate that is more favorable. The longer you extend the maturity of your loan, the higher your interest rate will be as banks price based on interest rate risk. When your mortgage comes up for renewal, you will renegotiate your terms based on interest rates at that time.

If you have a low risk tolerance, you may want to consider opting for a mortgage with a longer term as today’s low interest rates still make longer mortgage terms very appealing and affordable to clients.

All in all, if you have a mortgage renewal coming up, consider it a great opportunity to re-evaluate your financial picture and get a loan structure that will best suit your needs. By shopping the lending market and handling the negotiations for you, our team at Vertuity Mortgage helps to make the mortgage renewal process incredibly easy for our clients.

Please contact us to learn more about how the renewal process works and the current options available to you.