In its most basic definition, a mortgage renewal is defined as a new agreement to renew or extend mortgage terms with your current mortgage lender.
Within Canada, the majority of mortgages feature monthly payments, which if the payments are made in a timely manner, will pay off the balance of the loan in 30 years. This is referred to as an amortization period. However, shorter term mortgage options with smaller terms are available.
Let’s Look At An Example…[/b]
Let’s say you obtain a $200,000.00 for the purpose of purchasing a home. The mortgage is set up on a 4 year term, and your interest rate is 7%. Each monthly payment is approximately $1,300.00, based upon an amortization period of 30 years. However, your mortgage’s term is only 4 years. At the end of this time period, if you do not renew your mortgage, your lender has the legal right to demand the remaining balance. Therefore, your only options are to find a new lender or renew your mortgage.
If you have made your payments in a timely manner, then there should not be a problem renewing your mortgage with your current lender. The mortgage renewal process is very similar to the process of renewing your car insurance. Renewal papers are sent to you. You sign the papers and send them back. Your new mortgage will be based upon the monetary amount you owe at renewal time.
There are other factors that must be considered when deciding whether or not to renew your mortgage on its current terms. Are the current interest rates lower or higher than your old mortgage rate? How are interest rates expected to act in the coming months? Are you satisfied with your dealings with your current mortgage holder? What kind of fees and costs would you be expected to pay if you decided to switch lenders?
Before Renewing, Consider Your Options[/b]
Before signing mortgage renewal papers, consider all of your options. Generally, your renewal papers will arrive about four months before your renewal date. This is the ideal time to reassess your financial situation and to review current interest rates, in addition to reviewing the cost of switching lenders. Since your last renewal, has your financial situation improved? Would you be open to the idea of making a higher monthly mortgage payment with the goal of paying off the amount of your loan sooner? Have interest rates lowered? Now just might be the time to start shopping around.
Within Canada, the majority of mortgages feature monthly payments, which if the payments are made in a timely manner, will pay off the balance of the loan in 30 years. This is referred to as an amortization period. However, shorter term mortgage options with smaller terms are available.
Let’s Look At An Example…[/b]
Let’s say you obtain a $200,000.00 for the purpose of purchasing a home. The mortgage is set up on a 4 year term, and your interest rate is 7%. Each monthly payment is approximately $1,300.00, based upon an amortization period of 30 years. However, your mortgage’s term is only 4 years. At the end of this time period, if you do not renew your mortgage, your lender has the legal right to demand the remaining balance. Therefore, your only options are to find a new lender or renew your mortgage.
If you have made your payments in a timely manner, then there should not be a problem renewing your mortgage with your current lender. The mortgage renewal process is very similar to the process of renewing your car insurance. Renewal papers are sent to you. You sign the papers and send them back. Your new mortgage will be based upon the monetary amount you owe at renewal time.
There are other factors that must be considered when deciding whether or not to renew your mortgage on its current terms. Are the current interest rates lower or higher than your old mortgage rate? How are interest rates expected to act in the coming months? Are you satisfied with your dealings with your current mortgage holder? What kind of fees and costs would you be expected to pay if you decided to switch lenders?
Before Renewing, Consider Your Options[/b]
Before signing mortgage renewal papers, consider all of your options. Generally, your renewal papers will arrive about four months before your renewal date. This is the ideal time to reassess your financial situation and to review current interest rates, in addition to reviewing the cost of switching lenders. Since your last renewal, has your financial situation improved? Would you be open to the idea of making a higher monthly mortgage payment with the goal of paying off the amount of your loan sooner? Have interest rates lowered? Now just might be the time to start shopping around.