You've finally made it to your mortgage renewal, but wait, the interest rate is higher than what you're currently paying.
In fact, according to data from Ratehub.ca–focused on Vancouver and Toronto–many people renewing fixed-rate mortgages, with the current state of Canada’s interest rates, could be paying up to $1,000 more a month compared to their previous rates.
This can be a shock, but don't worry, it's not the end of the world. You have options and it's important to be informed and prepared.
First of all, don't panic. It's normal for interest rates to fluctuate, especially if your mortgage term is ending. The good news is, you have choices.
If you're happy with your current lender and the terms of your mortgage, you can simply accept the higher interest rate. However, it's still a good idea to compare the total cost of the mortgage, including interest rate, fees, and penalties, to make sure you're getting the best deal possible.
But, it's important to keep in mind that interest rates are not the only factor to consider when choosing a mortgage lender. Other factors such as the length of the term, the type of mortgage, and the lender's fees and penalties should also be taken into consideration.
When facing a higher interest rate during your mortgage renewal, one option to consider is shopping around for a better deal. This means comparing different mortgage products from different lenders to find the best fit for your needs and budget. Here's what you should know about shopping around for a mortgage renewals:
In certain cases, shopping around for a mortgage–and then switching to a new lender–may equate to some discharge, registration, or transfer fees. It’s helpful to calculate what your penalties may look like in comparison to how much you could save in the long run with the new interest rates you’re being presented.
And, when you find a mortgage product that you like, it's important to read the fine print. Be sure to understand all the terms and conditions of the mortgage, including the interest rate, prepayment penalties, and any other fees.
One option to consider when facing a higher interest rate during your mortgage renewal is to renegotiate with your current lender. If you have a good payment history and a strong credit score, your lender may be willing to work with you to lower your interest rate. Here's what you should know about this option:
In conclusion, if your mortgage renewal comes with a higher interest rate, don't panic! You have options, including shopping around or renegotiating. Before making a decision, be sure to check your credit score, understand the terms and conditions of the mortgage, and compare the total cost of the mortgage, including interest rate, fees, and penalties. With a little bit of research and preparation, you can find the mortgage that best fits your needs and budget.
If you have any questions or want to inquire about what a mortgage switch could look like for you at renewal, you can get in touch with mortgage agents at Pine who are happy to help you find a mortgage that works for you.