Is Your Mortgage Renewing in 2023? What All You Should Be Aware Of!

Are you one of the 1.1 million Canadians facing mortgage renewal this year?

Then, you are about to embark on an exciting journey of financial reassessment and potential savings! Okay, maybe "exciting" isn't the right word, but renewing your mortgage is an excellent opportunity to reassess your financial goals and ensure you're getting the best possible deal.

However, let us first understand what a Mortgage Renewal is.

It is the process of renewing your mortgage with your current lender or switching to a new lender after your current mortgage term is up. This typically happens every few years, depending on the term of your mortgage. During the mortgage renewal process, you can negotiate the terms of your mortgage, including the interest rate, payment schedule, and length of the term. This can be an opportunity to save money on interest and ensure that your mortgage aligns with your financial goals.

However, it's important to remember that mortgage renewal can also have potential pitfalls. For example, suppose you simply sign the renewal documents without doing any research or shopping around. In that case, you could end up with a higher interest rate than you would have received if you had negotiated with your lender or shopped around for a new mortgage with a Mortgage Broker in Ontario. Additionally, if you don't understand the terms of your new mortgage, you could end up with penalties or fees for prepayment or other issues.

If your mortgage is renewing in 2023, it's essential to start working with a good mortgage agent now to ensure that you are aware of all the factors that could impact your renewal. And this time can be a decisive one for you as The Bank of Canada has recently put the interest rates on hold, which means that there is no drop or rise in the percentage of interest rates, which opens ups the door at a perfect time for a mortgage renewal.

So, what should you be aware of as you head into the mortgage renewal process? Here are a few things to keep in mind:

1. Start planning about it early

Don't wait until the last minute to start considering your mortgage renewal. Give yourself plenty of time to shop around and compare offers from different lenders. This can take some time, so don't leave it until the last minute. By starting early, you will have more time to make an informed decision and potentially save money on your mortgage.

2. Don't assume your current lender has the best deal

Your current lender may offer you a renewal offer but don't assume it's the best possible deal. Shop around with your mortgage broker and see what other lenders can provide you with. You might be surprised at the savings you can find. Keep in mind that lenders are competing for your business, so it is worth comparing offers and finding the best possible deal.

3. Consider your financial goals

As you approach your mortgage renewal, take some time to think about your financial goals. Do you want to pay off your mortgage faster? Lower your monthly payments? Consider a different type of mortgage. Understanding your goals can help you make the best decision for your financial future. For example, if you want to pay off your mortgage faster, you might consider a shorter term or a higher payment amount.

4. Think about your lifestyle

Your lifestyle can play a significant role in your mortgage renewal decision. Are you planning to stay in your home for the long term, or are you considering moving in a few years? Are you comfortable with a variable-rate mortgage, or do you prefer the stability of a fixed rate? These are all critical factors to consider as you make your decision. If you plan to move in a few years, consider a shorter-term mortgage to avoid penalties for breaking your mortgage early.

5. Get professional advice

Don't be afraid to seek professional advice as you approach your mortgage renewal. A mortgage broker or financial advisor can help you navigate the process and find the best possible deal for your needs. They can also help you understand the terms and conditions of your mortgage contract and ensure that you're making an informed decision. Renewing your mortgage is an important decision that requires careful consideration and research.

6. Shopping around is worth it

If you have a stable income and your debt service ratios are reasonable, you should not feel compelled to accept your lender's mortgage renewal offer immediately. It is prudent to do some comparison shopping and assess how the offer stacks up against what other lenders offer. You can negotiate a better deal with your current lender with this information.

Before you switch lenders, you must be aware of the potential additional charges involved. These could include setup fees, discharge or transfer fees from your current lender, appraisal fees, and removal of collateral charges. While these fees are standard, a new lender may be willing to cover some or all of them to win your business. It is always worthwhile to inquire and see what they're ready to offer.

As your mortgage approaches its renewal date, it is essential to approach the process with knowledge, confidence, and creativity. Ensure that you are well-positioned to secure the best possible deal for your financial future. Whether you decide to stick with your current lender or explore new options, taking the time to understand the process and make informed decisions can help you achieve your long-term goals and secure your financial peace of mind.