For those in that position, and those with loans expiring in the next 12 months, it's best to go into the renewal process armed with knowledge of the types of terms you'll be dealing with and your options. Knowing ahead of time where you are can take some of the “level shock”. Depending on what your current lender and others will offer you, it may make sense to renew before your old mortgage expires.
Calculate your mortgage renewal
Use the Mortgage Renewal Calculator to get an idea of what you will pay when you renew. This tool allows you to play with variables, such as location, loan amount, loan term, amortization and payment frequency to help find loan terms that work for you. If your current lender has already extended proposed renewal terms, you can decide if they are competitive or if you should consider shopping around. You can even add in related costs like property taxes and utility fees to calculate your total cost of home ownership going forward.
Should you change the terms and conditions of your mortgage?
Worried that you'll be stuck with what ends up looking like a very expensive mortgage for the next five years? If you are confident that rates will continue to fall, you can reduce your loan term to three years, two—just six months. (Conversely, you may decide you don't want to go through this often stressful process again anytime soon.) Read our article to learn more about changing your loan term.
Or you might consider switching to an adjustable- or floating-rate mortgage. That way you'll always pay a competitive rate of interest, whether it comes with fixed or variable payments. Be aware, however, that even fixed payments can eventually increase once they reach the initial set amount. We've boiled down the arguments for fixed rate vs. variable rate loans from some of Canada's most knowledgeable mortgage minds.
Hto deal with higher payments
Regardless of which route your new mortgage takes, you'll likely be paying more than you signed up for in 2019 or 2020. We've put together a list of strategies for managing high borrowing costs (and potentially losing your home. ), from prepaying when possible to extending your repayment period. You can't ignore your entire financial picture, either; you may need to cut back on your discretionary spending, consolidate some of your debt or tap into savings and investments to get your household cash flow on track.
Compare current prices in the table below. Just change the first variable to “refresh,” and others as they fit your situation.
What if you hit a wall?
For some homeowners, the lender will not offer to renew their loan at any price. In high value situations or after a troubled loan period, your bank may simply reject your refinance application. Know that this is far from the end of the road. This article is about what to do if your renewal is denied and explains how to try to find a new, willing lender before turning to the ultimate solution to your mortgage renewal woes: selling your home.
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