Column: Is your mortgage renewing this year?

Kelowna columnists say mortgage renewal time provides an opportunity for homeowners

Of Prime Interest column

Of Prime Interest column

Renewal time is your opportunity to make changes with your mortgage and not incur a penalty for doing so.

Each mortgage has a specific term meaning you were guaranteed a rate for a set period of time. Do you know when your mortgage renews? A mortgage renewal is one of the most neglected moments in the life of a mortgage. With the new stress test in place it is even more important now to be confirm your lender is offering you the most competitive rate available.

You owe it to yourself to call a mortgage broker as rates available from a mortgage broker are often as much as 1.7 per cent below the banks posted rate—that calculates into a savings of over $250 per month based on a 250,000 mortgage—over a five year term that’s $15,000 you will save.

A mortgage broker will find you the lowest rate and the product best suited to your specific needs. In addition, you can be pre-approved up to four months prior to your mortgage coming available for renewal. This is the best of both worlds for you. A pre-approval guarantees you the rate for up to 120 days and if the rate goes lower during that period you get the lower rate. A win win situation for you.

What is involved?

At renewal you can increase or decrease the mortgage amount, choose a new payment frequency, change your amortization or the type of mortgage you have. The various types of mortgages available are fixed terms (six month to 10 year terms), variable rate mortgages or a line of credit.

As an example, if you are in a fixed rate product you could at this time easily switch to a variable rate mortgage or line of credit or vice versa upon qualification. If you have any high interest loans or existing credit card debt now might be the time to pay them off and include them in your mortgage. If you are increasing your mortgage at renewal, lenders will take into consideration your credit history, annual income, employment history and property value to determine your qualifications.

You may also have extra cash available—you can at this time apply it to your mortgage without penalty and reduce your mortgage amount. You can also leave all as is and simply negotiate a better rate. If you choose to leave your mortgage as is there is no cost involved to renew with another financial institution.

Remember, mortgage renewal time is a great opportunity to make the changes that are reflective of your lifestyle today. If your mortgage is up for renewal this year start preparing now and call a mortgage broker to discuss your options. It’s never too early. Your opportunity will be enhanced by discussing your current needs and securing you the best rate available and the product most suited to you.

Of Prime Interest is a collaboration of mortgage professionals Trish Balaberde (250-470-8324); Darwyn Sloat (250-718-4117) Christine Hawkins (250-826-2001)

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