When obtaining a mortgage, you may only be concerned about ensuring that the process is successful. Nevertheless, after some periods, renewing your mortgage may be an issue that you need to deal with. So, what are the essential things you need to know before renewing your mortgage?
1. Think about your current financial goals
As you are trying to renew your mortgage, it is vital to consider your current financial goals. In other words, look at your finances to be certain you can afford the repayment plan. Unless the mortgage plan fits your current needs, don’t sign the mortgage renewal slip.
Overall, factors to think about before renewing your mortgage include how long you plan to stay in the house and expected additional income.
2. Start looking for mortgage options early
Start shopping for a mortgage as early as possible to avoid choosing the wrong option. Normally, you will get a mortgage renewal slip from your current lender about 30 days before the end of the current term. However, you should consider starting your search for another option before that time.
Shop around and ask relevant questions about the repayment plans, rates, and other essential factors that can affect the mortgage. If you are able to find a better deal from another mortgage lender, you can easily and quickly switch to them. Besides, you can also negotiate a better deal with your current lender. You can never tell what will happen after due negotiation.
3. Negotiate a better mortgage rate
By making it convenient for you to renew your mortgage, your current lender is trying to encourage you to stay with them. However, on the renewal slip, it is likely that your current lender is only giving you a discount off their normal rate but they may still be withholding their lowest possible rate.
So, don’t let them take advantage of you. Don’t shy away from trying to get a better deal. You must understand that negotiating for a better deal is still your right as an existing lender. Therefore, you should try to negotiate for a better rate before renewing the mortgage.
4. Hire a mortgage broker and ask for a rate hold
Although you can find a good rate yourself, using the services of a mortgage broker can make a big difference. A mortgage broker will save you time and effort while still finding you a great deal with the aid of your credit report. An experienced broker will help you get lenders that are willing to work with you and provide excellent rates.
In addition, let your mortgage broker provide you a rate hold as this can save you from an increase in the interest rate for as much as 120 days. In case of any change in the interest rate, you can also get a chance to reduce it.
5. Take some time to switch lenders
Are you ready to switch lenders? If yes, you should start looking for a way to remortgage as early as possible. Use your proof of income, proof of property insurance, copy of your mortgage renewal letter, and proof of your homeownership to apply for a new mortgage.
This may take a week or more; therefore, apply about a few weeks before the end of your current mortgage term.