Early Mortgage Renewal Guide

Author: Boychuk Mortgage Group | | Categories: Mortgage , Mortgage Broker


Mortgage renewals can be a stress-inducing process, but with a bit of planning and strategy, you can save thousands of dollars. Here's a guide to help you make an informed decision when renewing your mortgage.

Start Early

It's never too early to start thinking about your mortgage renewal. Ideally, you should start planning up to a year in advance. Starting early gives you the chance to reassess your financial situation and secure a better future. Waiting until the last minute can limit your options and leave you scrambling to lock in a rate.

Explore Your Options

Your existing lender might offer you a renewal, but don't stop there. Get those offers in writing and then step into the broader market. Independent mortgage brokers can provide you with a range of options, from transferring to different lenders to refinancing. Exploring your options could save you a considerable amount of money.

Prepare for Anything

Renewing your mortgage might seem straightforward, but there can be curveballs. Lenders can decline your renewal, and there might be early renewal penalties. Always be prepared with income documentation, property details, and a solid credit report. Being prepared can ensure that you're not caught off guard by unexpected bumps in the road.

Early Renewals

It's possible to break your mortgage early to get today's rate, but you'll likely pay a penalty. However, it could be worth it in the long run, especially if you're planning on saving more cash down the road. Early renewals allow you to revisit your needs and make any necessary changes to your mortgage.

What is an Early Renewal?

An early renewal is when you end your contract early to form a new one, usually with the same lender. This break might be a good time to switch lenders for a better rate, take out extra funds, or change to a more flexible mortgage. During the early renewal process, your expert broker can always help you revisit your needs.

How Early Can You Renew?

You can break your mortgage anytime between the start of your contract and your natural renewal period. If rates are climbing up or down, breaking your mortgage term early to switch to a lower rate may help you save thousands. However, it depends on how much time you have left in your term, how much the early break will cost you, and if the rate difference makes it worth your while.

What Charges Could be Involved?

Breaking your closed variable-rate mortgage typically incurs a penalty of 3-months interest. A fixed-rate mortgage break will cost the greater of 3-months interest or the IRD (Interest Rate Differential). There may also be other fees or higher penalties attached, depending on the lender and mortgage contract.

Pay Attention to the Rate Spread

Variable rates tend to be lower than fixed rates, but if there's a wide spread between variable and fixed mortgage rates, you may want to renew early to take advantage of the savings. Many homeowners decide to take on the variable rate risk when the savings are higher.

By following these tips and working with an expert mortgage broker, you can make a smart decision when renewing your mortgage. Don't let your renewal be a missed opportunity – turn it into a financial win!

At Boychuk Mortgage Group - Mortgage Broker, we're more than just mortgage brokers; we're your partners in navigating the path to homeownership. 

To learn more about our services, please click here. If you have questions, feel free to call us at (778) 808-9944 or reach out via email at riley@boychukmortgages.ca.