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Here is a statistic that may surprise you: 2.2 million mortgages, or about 50% of all mortgages in Canada will renew this year! This amounts to approximately $250 billion in mortgages.
2025 is anticipated to be an even bigger year, with a whopping $350 billing in mortgage renewals expected.
If this is you, Plan For Wealth Ltd. has compiled 7 tips to renewing your mortgage wisely.
1. Consider the total cost of all your monthly debt payments
Add up the monthly payments for all debts and the interest rate then discuss with your lender whether a consolidation is better to help reduce your monthly costs.
Are you paying for bank mortgage insurance? You may be able to save considerably on this protection, by arranging your own life insurance through a licensed insurance broker such as Plan for Wealth Ltd.
2. Are you on weekly or bi-weekly payments?
With potentially higher renewal rates now, consider going back to monthly for this renewal to lower the monthly cost. You can always go back to bi-weekly or rapid payments in the future if your financial situation changes.
3. Consider extending your term
While you will pay more interest over the long term, it may be a solution to help address higher monthly payments on your mortgage renewal.
4. Consider when the best time is to lock in a long-term rate
Ask about the long-term and short-term mortgage renewal rates. If they’re high, consider a 1-year rate – then lock in a longer term once they lower.
5. Start discussions about your renewal early
Why? A mortgage is your biggest expense, and you will want time to negotiate and shop around. We recommend shopping the rate at every renewal – even if you are staying with your current lender. There is always wiggle room. Starting early also allows time to shop around, whether you are using this as leverage or considering switches lenders.
6. Use a Mortgage Broker
Ask for a list of all fees, whether in the mortgage or paid separately by you. Compare the rate they can get you with other offers from financial institutions like the bank and know the costs of moving your mortgage so there are no surprises.
7. Moving? Consider this:
Find out any penalties should you sell your home before the term ends to make sure its worth doing before your next mortgage renewal.
Upsizing your home? Ask about ‘porting’ or bringing over your existing mortgage and rate, and only paying the higher rate on the additional funds borrowed.
Remember that you will need to requalify if you move your mortgage or upsize. It’s best to find out early if you will qualify, before legal documents are signed. Otherwise, you may risk losing your deposit and could cause yourself significant complexities and costs.
If you need financial advice before your renewal, feel free to reach out to Plan For Wealth Ltd.
We are happy to prepare you for your renewal meeting to help ensure the best possible result. Visit http://www.planforwealth.ca/contact-us or call Rhonda Martin at 519-778-0905. We plan. You prosper.
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