A lot has changed since your last mortgage term began thanks to high inflation leading to increased interest rates – following years of historic lows. That’s why it’s important to review all options before your renewal date.
Step one is to speak with your mortgage agent early! Reviewing your options takes time, so it’s best to connect with your mortgage agent up to four months before your term is set to expire.
If you’ve had a three-to-five-year term that’s up for renewal this year, you’re likely going to experience an increase in payments as both variable and fixed mortgage rates have gone up significantly during this time.
What are your renewal options?
One strategy may be to opt for a shorter-term fixed rate if you want to see if rates will drop in the future. A fixed-rate mortgage will bring you greater stability with consistent payments. Payments don’t change – or see a greater portion go towards interest vs principal balance – like they do with a variable-rate mortgage. Your agent will also help you decide if it makes more sense to stay with the same lender or switch lenders in order to find the best mortgage rate and features suited to your unique situation.
Another option is to extend the amortization period on your mortgage. You may not be locked into paying your mortgage over a 25-year period. When it comes time to renew, you can extend the amount of time it takes to pay back your mortgage, if you have built up adequate equity, which may make your monthly costs more manageable. This will mean you’ll take longer to pay off your mortgage, but it may be the wise choice for your next renewal.
Have questions about your mortgage renewal? Answers are a call or email away!
