Deciding the best way to go when renewing your mortgage

If your mortgage is coming up for renewal soon it’s a great idea to do some research before you sign on the dotted line and stick with your traditional lender and five-year term.

I don’t have a crystal ball, and even the most educated economists are unable to accurately predict what is coming our way interest rate wise. The popular consensus seems to be the rest of this year is going to continue to be bumpy, then early into next year, rates will start to trend down.

The challenge with this is the last year has shown us that it is impossible to accurately predict what’s coming. International conflict, supply chain issues and societal changes due to the pandemic are all impacting our rate environment.

There are differences in how lenders handle their upcoming renewals. Some are proactive, reaching out to their clients at least six months ahead of their renewal date. Others will email or mail out a renewal offer about 90 days ahead of the renewal date without ever calling their clients. Some wait until about a month before to reach out.

When I speak to my clients about their upcoming renewals, I generally look to see if their current lender is offering competitive rates. If I am able to (some lenders won’t work with brokers after the mortgage is initially advanced), I will connect with the current lender to see if we are able to negotiate a better rate for my clients.

The reason I try this first is that renewing with your current lender is usually pretty straightforward. You choose the term that you want and sign on the dotted line.

If there is a compelling reason to consider switching lenders I will research what is available and which mortgage might be the best fit.

What do I mean by a compelling reason?

From time to time, some lenders are far more competitive with their rate offerings than others. If my clients’ current lender is not matching rates that are available from different lenders that is one reason we would consider making a move.

If my clients are looking to access some of the equity in their property (refinance at renewal) I will again research to see which lender might be the best fit. Sometimes that is their current lender, and sometimes it means making a change.

Mortgage products change over time, and rates vary from lender to lender.

My recommendation is to connect with a mortgage specialist five to six months before your renewal date. That way you can explore options and find the one that is best for your situation.

It also gives you some lead time to address any issues that might affect your ability to renew or refinance your mortgage.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.