Many Canadian mortgage lenders give their customers the option of an early mortgage renewal. At first glance today’s low-rate offers seem like a great deal, but it’s important to consider many factors when it comes time to renew your mortgage.
Make Sure to Shop Around
The great deal your current lender has offered you might not be the best deal out there. Check with other lenders to see who can offer you the best interest rate and the lowest other costs (see below).
Refinancing is another option that you may want to consider instead of simply renewing your mortgage. If you’d like to start a business, buy additional income property, go back to school, or simply lower your monthly payment and get a better deal, refinancing could be a good option for you.
If you’re switching lenders, your current lender will charge you discharge fees as high as $250 or more. You’ll also have to pay appraisal fees and additional legal fees if you want to refinance, and $150 to $250 on top of that for title insurance.
Be sure to weigh these upfront costs against any savings you’ll see over the life of your mortgage—it’s not just about a low interest rate.
In addition to the added costs of switching mortgage lenders, there’s a bit of time and some potential stress involved in changing lenders, too. You’ll need to fill out a new application, provide employment and income verification, and spend a chunk of time filling out forms.
Weighing the Pros and Cons
Finding out what various lenders have to offer and weighing the pros and cons of each deal is vital to making sure you get the best mortgage rate. A mortgage adviser can help you make sense of all the factors involved and ensure that you get what you’re looking for.
Stay tuned for Part Two of this post, with more tips on mortgage renewals.