Have you just received a notice of renewal from your mortgage provider? Renewing your mortgage for a new term? Here are some factors to keep in mind.
Your mortgage term is likely almost up, and it’s time to renew it. According to the law, the lender is required to send you a renewal notice 21 days before the end of the mortgage term. If you intend to continue with the same lender at the current rate of interest and terms and conditions, you can renew the mortgage at any time in the 120 days leading up to the end of the mortgage term. And, since you’re working with the same mortgage provider, you won’t incur the early renewal penalty.
Checking the Market Could Help You Win Lower Rates of Interest
Most lenders enclose a letter of renewal with the notice that you can simply sign and send back. Typically, you’ll receive the offer of a rate of interest that is around 0.75% less than their posted rate. While you do have the convenient option of continuing with the same provider, by checking around for the current status of the mortgage market, you could end up saving on the interest you’ll pay for the next mortgage term. And, this interest could add up to thousands of dollars. So, go ahead and contact a mortgage broker who can help you find out about any lower rates of interest or more favorable terms available in the market.
Here’s How to Make This Happen
To get the most economical rate available out there, you only need to look for a new loan provider in the last 4 months before the completion of your mortgage term. Should you find a lender with better rates, he is likely to hold the rate for the next 120 years until your current mortgage term is complete. Have the paperwork ready and make the switch at the end of the term without incurring a prepayment penalty. And, you’re sorted! You now have a new mortgage for the next 5 years at lower monthly payments.