When Is the Right Time to Renew Your Mortgage?

A mortgage is also the largest financial commitment that most homeowners ever make. And since terms of a mortgage are generally only for a few years — frequently three to five — you’ll almost certainly have multiple chances to renew before your home is paid off. But here’s the million-dollar question: When is the right time to renew your mortgage?

By locking in a good rate today instead of re-upping out of habit, you can end up saving substantial amount on interest payments, and it could also make your loan much more flexible and keep you financially secure.

What Is a Mortgage Renewal?

A mortgage renewal is when your term comes to an end and you still have a balance owing. You don’t pay back the loan in full — instead, you renegotiate a new term with your current lender or a different one.

These are the biggies you may want to update during renewal:

• The interest rate
• The length of the new term
• Payment frequency
• Type of mortgage (fixed versus variable in some cases)

This is not simply a paperwork drill — it’s an occasion to reconsider your financial goals.

How do you know when it might be the right time to renew?

Your Term Is Ending Soon

The majority of lenders are going to send a renewal notice 4–6 months before your term expires. It’s now time for you to begin shopping around and weighing offers. Don’t leave it until the last minute — renewing early is your friend.

Interest Rates Are Favorable

If rates have gone down since you took out your mortgage, renewing early (or breaking your current term entirely in some cases) may be a way to capture savings. A lower rate indicates lower monthly payments and less paid in interest over the life of the loan.

Your Financial Situation Has Changed

Life is not one set moment after another. If you’ve had changes to your income, expenses or goals, renewal is the ideal opportunity to change up your mortgage. For example:

• Looking to be mortgage-free sooner? Instead choose a shorter term or higher payments.
• Need more breathing room? Opt for a longer term with smaller payments.

You Are Unhappy With Your Present Lender

Renewal allows you the opportunity to change lenders without penalty (as opposed to refinancing mid-term, which could incur fees). If you’re unhappy with service, rates or offerings, renewing your policy is an opportunity to see what else is available.

You Want to Renegotiate the Terms So You Can Be More Flexible

Renewal is what we’re talking about, and it’s not all about rates, but also flexibility. Perhaps you’d like prepayment privileges, the ability to make lump-sum payments or a more frequent payment schedule. and that renewal is the perfect time to make those changes.

When You Might Wait to Renew

Early renewal can be appealing, but it may not always be a good idea:

• Rates are forecast to fall again. If experts expect rates to be lower soon, then waiting until closer to your maturity date could help you get a better deal.
• You’d face early renewal penalties. Others, however, will charge fees if you decide to break your contract too soon. Ensure that the savings exceed the costs.

Smart Tips on a Renewal Strategy

• Start Early – Do not wait till the day your lender is making its offer to get started. Start your research 4–6 months before you will be terming out.
• Getting multiple quotes from several lenders will help consumers find the best rates and terms. What’s best isn’t always what is most loyal.
• Negotiate – Even if you ultimately decide to stay with your lender, throw down for a better rate or terms.
• Hedge Your Bets – Select a renew option based on your long-term financial model, not the lowest payment.
• Consult An Expert – A qualified mortgage adviser will guide you through and show where there can be hidden opportunities.

The “right time” to renew your mortgage isn’t just a matter of calendar dates, but also about timing your loan with your financial requirements and market circumstances. So whether you want to save money, pay off your mortgage faster or simply give yourself some flexibility, timing a renewal right can put you ahead.

We at Monalending provide useful information for homeowners to consider before it’s time for renewal. You can turn your mortgage renewal into a financial advantage with the right strategy.

Is your mortgage maturing soon? Your are just a call away to Monalending, talk and secure best deal.