When you have completed your selected term, your mortgage is then up for renewal, that means your mortgage is fully open on the renewal date. When your mortgage is up for renewal, you have a couple of options. You can renew with your existing lender at the rates they are offering you. Or, you can do some research and see if there are any lower rates out there. Maybe it is not the rate you are thinking about, perhaps you know you will be doing some investing and would like to access some of your unused equity. Whatever the reason is, it pays to do your research about your available options.
Frequently asked questions:
Does it cost anything if I want to move my mortgage at the time of my renewal?
When you are switching lenders, there are 2 main costs. The legal fees to have all your paperwork changed to your new lender, and maybe an appraisal to confirm the value of your property. Your existing lender may charge some administration or discharge fees as well. That would be in the fine print of your mortgage commitment. In order for your mortgage to qualify as a switch/transfer, you must be switching dollar for dollar, and your amortization cannot change. Most of our lenders offer some kind of transfer or switch program where they will reimburse you for some of the costs involved with moving your mortgage to them. Some lenders will cover all costs, some lender offer up to $500 of costs, anything on top of that is out of pocket. The beauty of a straight switch/transfer is the paperwork is minimal, so sometimes a lawyer or an appraisal is not needed. It differs among lenders, sometimes the lender with the best rate will only cover up to $200, so be prepared with some cash on hand if you want to save in the long run.
What is the process if I want to add more money to my mortgage amount?
If you are adding money to your mortgage, or changing your amortization it is not a switch/transfer anymore; it is now considered a refinance. That means that the costs to cover the mortgage will not be paid for by the lender. You can look at having some of the costs deducted from your refinance proceeds, especially the legal fees.
An estimate of the costs your can expect are:
- Legal fees: $390- $600
- Appraisal cost: $225- $350
- Discharge/Admin fees from existing lender: $250
What kind of paperwork will I be asked for?
When you are switching your mortgage, you are moving to a new lender, this lender does not know anything about you. You will have to fully re-qualify with your new lender, so it’s the usual documentation.
- Income confirmation - what we ask for depends on your employment
- Property tax confirmation - via recent property tax assessment
- Existing mortgage confirmation - via recent renewal notice
- Confirmation of any other debts - ie, other properties owned, we would request some supporting documentation.
Bottom line is you are moving to a new lender and they want to make sure you can qualify for your mortgage. That is in the best interest of the borrower and the lender.
How long does it take to have the new mortgage arranged?
When your mortgage is up for renewal, there is a specific date that you have to have financing lined up by. Your existing lender is saying that by this date “you are required to pay us out or you must renew into a new term with us”.
To arrange your new mortgage, we like to have about 3 weeks, just to be safe. But 2 weeks is also possible. If your renewal date is really close and you still want to switch your mortgage to a new lender, you can renew your existing mortgage into an OPEN term. What that does is it buys you some time to find new financing, and then when you payout your existing mortgage there is no payout penalty because it is an open term.
If you are thinking of making a move, speak to your mortgage professional today and get some sound advice that will save you money!
Renewing your mortgage is as important a financial decision as selecting it in the first place. At renewal time, you are usually in a stronger financial position than when your mortgage term started and you certainly want that recognized.
This is where your trusted Mortgage Advisor can assess your situation, survey the options across the market, and make a recommendation in your best interests.
Simply accepting your current lenders renewal terms may not be your best option. Just as your needs may have changed so too have the options available in the market and the best choice now may not have even existed when you first obtained your mortgage. Our Mortgage Advisors are experts at keeping current on what is available and seeking ways to save you time and money.