As a Mortgage Broker and Certified Financial Planner with over 12 years of experience with mortgage renewals, I’ll be the first to admit that not everyone looks forward to working on their mortgage at renewal time.
But the good news is it does not have to be complicated, and it’s worth looking into because, for the small amount of time needed to pursue your best mortgage renewal options, the savings could easily be in the thousands of dollars.
For example: It could take 1-2 hours of your time to complete a mortgage renewal at a 0.50% lower rate than your current lender is offering. If your mortgage balance owing is $300,000 then, using simple math, your savings would be $1,500 per year or $4,500 over 5 years.
This article will focus on helping you get the best possible deal for your mortgage renewal. Typically this means getting a lower rate – but it’s more about how you can get that lower rate, and in the easiest way possible that we will focus on here.
More specifically we will look at:
- How to time the market to save more on your renewal.
- The mortgage renewal process in 5 easy steps.
- How to get a better deal from your existing lender.
- Mortgage renewal vs refinance
- Can you be denied a mortgage renewal?
How to time the market to save more on your renewal
The best advice I can provide is how to time your renewal.
If you have 120 days (or less) before your renewal the best thing you can do is to lock in a rate – but to avoid early renewing.
This means reserving a rate, so that if rates increase before your renewal – you will be protected because you locked into a rate earlier on.
However, because you did not finalize the renewal or ‘early renew’, you leave yourself open in case rates drop further. More specifically, if mortgage rates drop, then we can ‘float down’ your already approved rate, or perhaps switch lenders if it is justified.
This method of timing reduces your risk because it protects you from higher rates while at the same time leaving the opportunity to save open in case rates drop. We help our customers every day with this process to make it easy.
As a word of caution – the mortgage renewal is a time when a lender can make up a lot of profitability – so it may not always be best to follow the existing lender’s advice to renew early. They want the business closed and to move on. But a little patience and timing could go a long long way.
Mortgage Renewal Rates
The best mortgage renewal rates in Ontario are typically full feature mortgages. These mortgages are typically identical if not better terms and conditions in the fine print and typically do not require appraisals, Broker fees, or other costs to switch into. Often the absolute lowest rates are ‘high ratio’ mortgages and non-high ratio rates can be subject to a slight premium.
How do we ensure YOUR best renewal rate? What’s the catch??
Our customers often ask how we obtain such low mortgage rates on their renewal. In short, this is a result of:
- Shopping dozens of market leaders.
- Using high volumes and lender promotions to lock in special discounts.
- We cut several ‘middlemen’ out of the process, and pass these savings on to you, the customer.
Our low rates are NOT the result of:
- Higher penalties.
- Small, unstable lenders.
- Poor service.
There is no catch. Altrua Financial quotes you the lowest renewal rates, the first time you ask, without the hassle. It’s the first step to building trust in a long-term financial partnership.
Top Renewal Rate Tips:
- Often, at renewal time the existing lender will try and continue their client to lock in early. This is often a pressure tactic to help ensure that you, the client do not shop around for a better deal.
- There is no cost, and it takes very little effort for us to monitor your rate before renewal. For the small amount of work involved, the savings could be huge.
Mortgage Renewal Process in 5 Easy Steps
As has been discussed, the entire process can take anywhere from 30 minutes to 3 hours of your time, and in the vast majority of cases, there is no cost to you, the borrower. The result of this process should be thousands of dollars in savings, and a mortgage that works for you over the next few years.
The following will summarize some of what was mentioned above, and add some new information as well as an easy process to consider following for your mortgage renewal.
1. Goal assessment
We want to get the mortgage renewal done quickly and painlessly, but at the same time, we want to do a good job. A 5-year mortgage term is a long time, so it’s worth taking a few minutes to consider:
- Do you have any plans to move in the next 5 years?
- Do you plan on any major purchases?
- Other major expenses, investment or goals in the next 5 years?
Your answers to these questions will help us determine what kind of mortgage options may be best for your consideration.
2. Contact Your Existing Mortgage Lender
We want to try and make savings as easy as possible for you, so there is no better place to start your renewal shopping than with your existing lender.
- Connect with your existing lender to see what renewal rates they offer.
- If your current lender offers you an uncompetitive rate, this is not uncommon.
- Be clear and transparent with your lender – let them know that you plan on looking around to ensure you get their best rate.
Knowing that if they are not competitive, they may lose your business, this quick conversation will help to ensure they provide their best possible renewal rate.
3. Connect With us at Altrua
Mortgage brokers will shop many different lenders, including Big Banks and Credit Unions, to ensure you get the best rate possible. They take the legwork and hassle out of the mortgage renewal process for you.
At Altrua Financial there is no cost and no obligation for us to shop the market for you – and the first introduction conversation usually takes about 15 – 20 minutes.
At this point, you now know what your current lender is willing to provide and what the new lender is able to provide.
From here, if you decide to switch lenders, you do not need to contact your existing lender. The new lender will take care of this and it all happens automatically, with ease.
4. Completing the Application
If it sounds like you can save substantially by switching lenders, and the terms and conditions are good, then it can make sense to proceed with a lender switch.
Typically it will take another 15 – 20 minutes to complete the mortgage application, and then after confirmation, your Altrua broker will submit your application to the low rate lender
5. Finalizing the New Approval
After the mortgage renewal is approved by the new lender, it is sent to you for review and eventual signing.
Then, after your questions are answered, the approval is signed and sent back to the lender along with a few other simple supporting documents that are, in most cases, easily available.
A free included legal service works behind the scenes to transfer your mortgage from the existing lender to the new lender. Typically you do not have to contact your current lender – it all happens automatically.
Your new mortgage closes on the renewal date/ maturity date and you benefit from the savings over the years to come.
Top Renewal Process Tips:
- The sooner you can get started on the process, the better because by monitoring the market there will be more opportunity to get you a lower rate.
- Connect with your existing lender to give them a fair chance at your business – their rate will almost always move down.
- If you switch lenders, ensure the terms and conditions with the new mortgage are the same or better than your existing one. It’s important to get the best rate AND fine print.
- Working with a Broker online, such as Altrua will help you to save time on your renewal by completing the signing digitally – it usually takes about 2 hours from start to finish and there is not any cost or obligation.
- Your existing lender may try to early renew you. This could be a good idea, or maybe not. If rates are falling, an early renewal might not work in your favour. But if they are about to increase, it might not work in your favour. In our experience, a lender will often say what they need, to lock in your business sooner than later. Connect with Altrua for our perspective on where rates are heading.
How to get a better renewal deal from your existing lender
The answer here is actually very straight forward: don’t just take your Banks or lenders’ first offer. Instead, call then and tell them that you’re shipping around. Tell them that you are looking for the best rate, and that you want to give them their best opportunity to compete for your business. After all, if your current Bank or lender has the best renewal rate, then why leave?
So giving your current lender a good chance is important, and the ket here is to be transparent with them about your intention. Get them, to provide you with their lowest rate. No games. If you can get a better rate elsewhere, then why does the current lender deserve your business? If you’re not happy with the rate they are providing at the end of the day, then it might be time to consider moving on.
There’s more going on here than ONLY rate – its the morals and philosophy behind earning your trust and business that matter too.
Mortgage Renewal vs Refinance
The first step in the renewal process was to look at your goals. The mortgage renewal vs refinance answer will depend on these goals. Do you need extra money for:
- Consolidating Debt.
- Remodeling/ renovating your home
- A mix of the above, or any other reason.
The renewal date is the perfect time to refinance because there is no penalty to break the mortgage.
However, be aware the drawback of mortgage renewal vs refinance is that mortgage refinances rates are usually a little bit higher. So if you are looking for a refinance, make sure to ask your broker to quote you the best rates for this type of mortgage.
Can you be denied a mortgage renewal?
If you have made your payments on time it should not be an issue to renew your mortgage.
Even if one or two payments were made slightly late, this does not typically raise a flag.
But under what circumstances can you be denied a mortgage renewal?
If there were several missed payments over the term or if close to the renewal date, payments are in arrears, this could lead a lender to review your credit and income to see if your financial picture still fits their lending profile.
If you are worried that this might be the case for you, check out these tips below on what you could start doing to ensure a continuation of your mortgage at renewal time
- If at all possible, do not miss any mortgage payments in the final year of a mortgage term.
- Start shopping the market as soon as possible. This will open you to the best opportunity for your best deal, and if there is an issue we may be able to fix this issue to move to another low rate lender.
- If you do need to move to an alternative lender for a year or two, the sooner we can determine this the better as it may involve a refinance and there is still deal shopping to be done with alternative lenders.
- Consider who holds your mortgage – having all of your financial information and mortgage at one Bank can be a benefit, however it also gives that Bank a lot of data to work with in making their renewal decision. For example, if they can see accounts that are struggling and other missed payments, they will automatically take this into account.
- Given the above information, it can help to use a seperate mortgage lender to limit the amount of information and power that any specific Bank has.
How about an Early Renewal?
The mortgage renewal process can start as early as 6 months to a year in advance as we can monitor the market to see if an early renewal makes sense for you.
- If rates are trending up it might not make sense to wait.
- But if rates are trending down it probably does make sense to wait.
- More to come on rates in the next section on mortgage renewal rates.
With this said, even if there is just one week left until your renewal, there should still be enough time to negotiate a better deal, and proceed with this process in short order.
Principal Mortgage Broker (Lic. # M08006143), Certified Financial Planner (CFP), BA (Hons.)
Altrua Financial Inc. FSCO #13005
Book a Free Renewal Call with Brent
- No fee, no appraisal, no extra cost renewals. Just lower rates.
- Over 12 years mortgage experience, between a Major Bank and Broker
- More client savings, on over 500 renewal transactions.
- Certified Financial Planning (CFP) designation enables him to establish unique, long-term relationships with clients that focus on wealth creation through consistent mortgage-based savings and planning, and other financial goals.
- Best rate Guarantee*