6 Ways to Get the Best Mortgage Renewal Rate

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Mortgage Renewal

Is Your Mortgage Up For Renewal? Here’s What You Need To Know!

Every time your mortgage is up for renewal you have the chance to find a lower mortgage rate or look for options that better suit your financial needs. Although it may be tempting to take the easy route and renew with your existing lender, it may not always be the best decision for you. If you are approaching your mortgage renewal date and are unsure of how you should proceed, this guide will tell you some of the important key things you need to know about the best options available when renewing your mortgage.

Should You Switch Or Should You Stay?

As your mortgage renewal looms around the corner, the biggest decision you’ll have to make is whether you should stay with your current lender or shop around for a lower rate and better terms. There are many other factors that could also contribute to your decision about how to handle your mortgage renewal.

Firstly, the best and most important step you can take in your mortgage renewal journey is to start thinking about your renewal options at least 4 to 6 months prior to your mortgage term’s maturity date. Starting the process ahead of time will give you the ability to assess your needs, look for a new lender and find the best rate available to you without feeling rushed or pressured.

What we see all too often is that borrowers become comfortable resigning with the same lender because they don’t want to go through the “trouble” of shopping around. As a result, many borrowers end up settling for a higher rate than they could have gotten elsewhere just to avoid the inconvenience of switching, or simply because they do not know better. Lenders are aware of this trend and may purposely offer renewal rates that are higher than the rates they may offer on new mortgages. On average, the mortgage rate on a renewal will be 0.09% higher than that on a new mortgage. Although this may not seem significant, even small percentages can add up over time. Trained and experienced mortgage brokers Toronto and in other cities specialize in helping borrowers like yourself get the best mortgage rates and terms available to you.

On the other hand, while the rate with another lender might be better, you will have to undergo the qualifying process once again. For many borrowers, that may not be a challenge. If you maintained or improved your credit score and income since your last mortgage approval, you stand a good chance at being able to qualify for a rate that may be substantially better than your current mortgage rate. However, if you have lost your job, procured more debt or taken a hit to your credit score, you might have a hard time passing the stress test once again. The good news for borrowers who have been victims of financial hardships is that their current lender will not need to re-qualify them for their mortgage renewal. Borrowers can also look at other lenders, like credit bureaus and trust companies, who do not always implement the stress test in their approval processes.

The most common misconception about switching lenders is that it will be challenging and time consuming. This is not always the case. All you have to do to avoid a long and often difficult path of rate shopping is to let a professional mortgage broker do it for you! Since the mortgage brokers at Clover Mortgage have access to many different lenders, they will be able to shop around for the best rate with many different lenders without you having to even lift a finger once your application has been completed. The best part of this whole process is that your mortgage broker will only have to pull your credit once, rather than every individual lender pulling it every time you want to get an accurate mortgage rate quote. Not only will switching lenders be fast and easy, your credit score will not be affected.

6 Tips To Make Your Mortgage Renewal Seamless

We have compiled a list of 6 tips to make your mortgage renewal process a little easier and less tedious for you, all while making sure you qualify for the best rates available:

1. Speak with a Mortgage Broker

Mortgage brokers can create a file and mortgage application for you by pulling your credit only once, taking it to many different lenders and making sure you are getting the best rate available to you.

2. Start Looking Early

Start looking at mortgage rates and talking to different lenders and mortgage brokers at least 4 to 6 months before the end of your mortgage term.

3. Shop Before You Sign

Don’t sign the renewal letter that your lender automatically sends to you before your renewal date. Always speak with someone, whether it is your lender or a mortgage broker to make sure you are getting the best deal.

4. Don’t Just Look For The Lowest Rate

Research your lender and make sure that you are happy with every part of the contract. Rather than just looking for the best and lowest rate you can find, learn more about the prepayment fees and other terms that could affect your contract and your future financial situation. An experienced mortgage broker will help you understand the different pros and cons of each mortgage contract and offer received from various lenders.

5. Credit Is Key

Your credit score has a major impact on the rates that you can qualify for when getting a mortgage. Make sure you are paying your credit cards and loans on time. Work on trying to improve your credit score as much as you can before you start looking for a new lender. Check out this article we put together on how to improve your credit score and repair your credit .

6. Keep Debts Low

The less debts and liabilities you have, the better the rate you will qualify for. In the year before your mortgage renewal, work on trying to decrease your debt. If you are thinking about procuring another loan, wait until after you renew your mortgage.

All in all, the best option for borrowers approaching their mortgage renewal date is to speak with their current mortgage lender about their renewal rate. Then take that rate to a mortgage broker and see if they can get you approved for an even better rate, potentially with better terms. A good mortgage broker will be able to look at your file and better advise you on the solution that will make the most financial sense. At Clover Mortgage, our mortgage brokers have access to over 40 different lenders and can make sure that you are getting the best mortgage rates available to you in the current mortgage market. If you want to avoid the stress test, we will work diligently to get you approved without it at one of our many alternative mortgage lenders.

Call Clover Mortgage today at 416-674-6222 or email us at info@clovermortgage.ca to learn more about your mortgage renewal and find out if we can match or improve your renewal rate and terms!

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Steven Tulman
Written By Steven Tulman
“Making the process of getting a mortgage an easy and enjoyable experience for every Clover Mortgage client!”