Mortgage Renewal, and the steps to take before you start shopping

We’ve talked Renewals before, and your two options at the time of renewing your mortgage.This article is about what you should do well before your mortgage comes up for renewal.

You shopped around for the best rate, most ideal pre-payment privileges, and most flexible mortgage when you purchased your home. 4 years, and 10 months have passed, and that mortgage is coming up for renewal -what should you do now? You know you should again shop around for the best deal, yet surprisingly, nearly 70% of Canadians renew their mortgage with their bank.* That choice to let their existing Bank handle their mortgage renewal could be costing Canadians money, but before even starting to shop for the best rate, you should be doing this as your mortgage renewal date approaches.

Here is a list of 4 things you need to do as your mortgage renewal approaches:

6 months before your mortgage renewal

1. Make sure you familiarize/re-introduce yourself to your existing mortgage.

At the time of setting up your mortgage, you should have been aware of its details, but in case that didn’t happen, or you have forgotten some of it’s finer points, go over the mortgage contract you signed.

This will be helpful when dealing with your mortgage renewal, since you now know what features of your mortgage you actually used, and which ones you didn’t. You might learn that your mortgage came with options that you didn’t use for the entirety of your term -yet you paid a premium on rate to get them. Conversely, you might learn that your mortgage isn’t what you originally thought it was, which may have already, or will cost you money. This step is important because it will help you streamline the shopping process when selecting your next mortgage at the time of renewal.

2. Do some market research about mortgage products being offered in the marketplace

Just like any other product, over time, mortgage products being offered on the market change. Loan to value limits, income qualification ratios and criteria, credit requirements, and even regional availability can change from month to month. You want to find out what product(s) are available to you at this time, so that you have time to go over your options with plenty of time to decide.

3 months before your mortgage renewal

3. Talk to your friends and family members

The people around you most likely have mortgages. They most likely have mortgages arranged by different brokers, and from different financial institutions. These people can tell you about their renewal experience(s), and possibly refer you to someone whose services they felt satisfied with.

4. Do some research on your own

Armed with a list of referred brokers/bankers, contact each one to get a feel for their level of expertise and comfort. On top of that, do some research online on your own. Each customer’s experience with a mortgage broker will be unique, and each mortgage broker will be unique too, so there is no guarantee that you’ll be happy with a mortgage broker that your friend was happy with. There are things to look out for when selecting a mortgage broker, so it is important to talk to a few to determine who you feel most comfortable, and confident in.

At mortgage renewal time

Finalize your selection

You now know what home financing product you want at mortgage renewal, and you know who you want to have involved in helping you get that product at the time of mortgage renewal. The next step is to talk to your broker, and finalize a plan of attack that will help ensure that you receive the mortgage or HELOC that will best suit your personal situation.

*as per a 2012 study by the Canadian Association of Accredited Mortgage Professionals http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2012/12/caamps-mortgage-market-report-fall-2012.html

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About the author

Anuj Gupta, BComm

Anuj was born and raised in Edmonton, and has been a broker at Alberta Mortgage since 2005. With a Bachelors of Commerce degree from the University of Alberta, Anuj has been helping Albertans become first time homeowners, and helped Alberta Homeowners save money on their mortgages for over a decade.