Is your current mortgage still competitive? Has there been a change in your job or your family situation? Are you up-to-date on what the market is doing with regard to interest rates? It’s always a good idea to review your mortgage at renewal time to make sure you’re in the best product for your current needs and that it still fits into your overall financial plan. This is a great time to re-evaluate your needs.
Typically, the renewal process starts when your lender sends you a mortgage renewal statement about 30 to 45 days before your current mortgage matures. At that point, you will have to make an important decision. The renewal letter may not give you the best rates available. In fact, these are often higher than the lender’s lowest rate. Negotiating a rate and other privileges can strengthen your financial position.
Too often, Canadians receive their renewal notice and sign on the dotted line without weighing their options. By doing your homework, you can bring yourself one step closer to mortgage freedom.
Here are a few ideas to pay off your mortgage faster:
- Pay down as much as you can afford on the existing mortgage before renewing.
- A new mortgage should be tailored to your specific needs and not to the latest headlines.
- If the renewal rate is lower than your previous rate and you are still comfortable with making these payments, keep the payments the same at the lower rate.
- If you’re making more money, try shortening the term of the mortgage. By paying bigger lump sums each month. This strategy not only cuts the repayment period, it also saves you interest in the long term and pays down your mortgage faster. It’s a great option for those who are financially sound, planning an extended leave or working toward early retirement.
Apart from making larger payments, you can also change the frequency of your mortgage payment from monthly to accelerated biweekly or weekly installments.
You may also want to consider refinancing at renewal time. Refinancing frees up cash you may need for debt consolidation, home renovations or investments. So take a fresh look at your future and stay on top of your renewal. Or let me do that for you!