Before renewing the mortgage, consider your future plans
As your mortgage matures, considering all options allows you to choose the most advantageous mortgage product. But, before you even start shopping, you need to know if you want to re-borrow when you renew your mortgage. Generally, two factors can motivate this important decision: your current indebtedness and your future plans.
Indeed, re-borrowing when renewing the mortgage can save you money on your debt costs. That’s why it’s a good idea to study your debts and interest rates to see if it’s worthwhile to re-borrow. Cards and lines of credit, a car loan or a personal loan often have a higher interest rate than the mortgage, you could do a good deal at the renewal of the mortgage!
On the other hand, if you have projects that require a significant investment, the term of your mortgage may well serve you. It is to your advantage to re-borrow to finance renovations, to expand your property, to maximize your RRSPs or to invest in a revenue building.
However, remember that a mortgage is also a debt. Before renewal, it is therefore essential to choose specific projects that justify the restructuring of your mortgage, because re-borrow should not simply become a way to live beyond your means. In short, if your future projects offer you a good return or increase the value of your investment, go for it!
One last piece of advice: If you plan to invest in your property by renewing your mortgage, make sure you choose a financial product that fits your future plans. For example, if you plan to sell your property in 2 years, avoid signing a mortgage that commits you for 5 years. It will cost you too much in penalties! A mortgage advisor can help you take all of these things into account and educate you.
What other questions do you need to ask yourself before renewing your mortgage?
Whether you’re looking to re-borrow or not, your mortgage renewal is still an opportunity to make beneficial changes. Indeed, the water has undoubtedly flowed under the bridges since your last signature and it is likely that other mortgage products suit you better today!
To find out if you are choosing the right product for you and your family when you renew your mortgage, ask yourself these questions before signing:
- Are we satisfied with our financial institution?
- Are there better banks or lenders for our needs?
- Are we certain that our current financial institution offers us the best rate for our mortgage renewal?
- What would be the best loan for us right now? The variable line of credit? In the short or long term?
- Are our RRSPs maximized?
- Are we still interested in this dream cottage on the lake?
- Is this the right time to invest in a revenue building?
When renewing your mortgage, have all the information in hand
If you are one of the homeowners who have to renew their mortgage this year, have you thought about getting information from different sources? Often, we do not think of it for a “simple renewal”, but consulting a mortgage broker can be extremely wise!
In fact, before signing up with your financial institution, a mortgage broker can ensure that your mortgage renewal is really advantageous for you. For example, it will be able to compare the rate offered to you with market rates and renew your mortgage at a more profitable rate. And since he is able to study all options, a mortgage advisor can also offer you other financial products that may be more suitable for your situation, such as a variable line of credit.
Even if you choose to keep a mortgage with your usual financial institution, remember that the mortgage broker actually works for you. He will be able to verify that your bank’s proposal is adapted to your needs and your future projects. It could even help you avoid future fees or penalties, if any.