Time to renew or refinance your mortgage?

Understand your options

If your mortgage is coming up for renewal, there are many things to consider to ensure it meets your current and future needs. When interest rates are low, you may wish to refinance or "blend and extend" before the term is up, particularly if you're currently paying a higher rate.

Of course, whether you’re renewing or refinancing, it’s not the first time you’ve dealt with a mortgage. And while the second time may be easier, it’s no less important. Here are some of the things you need to know.

Review before you renew

In many ways, renewing is similar to setting up your mortgage the first time. Before your term ends, your lender will contact you to renew. That's usually when most people research rates, terms, mortgage types, and lenders.^*** Mark your anniversary date on your calendar.

When renewing, you keep your current mortgage but have the opportunity to adjust the specifics like rate, term length, amortization, and payment schedule. If the features of your current mortgage work well for you, you can renew with your existing lender easily by discussing any modifications you need and negotiating the rate.

All mortgages are "fully open" at the end of their term, so if you are considering making a change in your financial institution, this is the time to do it without penalty.

Negotiate a lower rate

Negotiating a lower rate doesn't have to be painful. If you have a long-term relationship with your lender, you may find that you can negotiate a better rate than what’s offered, particularly if you've done your research.

Check currently advertised rates to ensure that you're offer is competitive. Consider whether you're willing to move accounts, investments, or other business over to a different financial institution to qualify for a better mortgage rate. Lenders are far more willing to give you a better rate if you offer to do additional business with them.

Think about a mid-term break

If you wish to change any of the terms in an existing mortgage before the renewal term, it is considered a refinance. This means you're paying your mortgage out in full in order to arrange a new mortgage – either with the same lender or a new lender. If you want to refinance before your term ends, there will be pre-payment penalties.

Refinancing is a good option if you find your current mortgage features aren't right for you or if you want to try a different lender. In low interest rate conditions, it's also smart to look into refinancing in order to exchange a higher rate for a lower one. You may save thousands by renegotiating or switching before your term is up. It will all depend on the differential between the old and new rate and the amount of the penalty.

Consolidating debt

Debt consolidation is also another good reason to consider refinancing. When you have a number of debts with higher interest rates than your mortgage, you can talk to your lender about consolidating those debts with your mortgage to create one monthly payment. The lower interest rate will create a cost saving for you and help reduce your monthly payments.

Many lenders allow you to "blend and extend" your rate. This works by taking your existing mortgage rate and blending and extending it with the current rate available for a new term length at a weighted average. This option will allow you to take advantage of lower interest rates rather than risking what may happen when your term renews.

Consult the experts

Your mortgage is likely the biggest loan you will ever have and your biggest financial decision – it also has the greatest impact on your financial health and overall lifestyle. Be sure you have a trusted financial advisor to explain all the mortgage options clearly, so you end up with a solution that meets your unique requirements.

Contact us or visit your nearest branch to speak with a BlueShore Financial advisor about renewing or financing your mortgage today.