The average home price in Canada stands at around $503,301. Most people that own a home have a large portion of their monthly budget going towards their mortgage payment. When the mortgage term is up, lenders tend to raise the interest rate. To make it easier for you to get a better renewal rate when it’s time to renew, we have compiled several tips to help you get a better rate.

Quick Read:

Early Rate Shopping

You should begin to shop around for the best rate before the renewal date draws near. Many lenders will let you renew early and usually within 120 days of the mortgage terms and not charge you a penalty. Your current lender may not be able to give you the best rate on the current market, so you should check with other lenders to see if you can get a better rate for the renewal.

Ask for a Better Rate

During the last 30 days of the mortgage term, the lender will send you renewal offers. Many lenders will offer around 0.75% off the rates they post. They will include a letter that you can sign and send back to them with the agreed to rate. This can be a convenient way to renew, but it can end up in a higher rate than what you desire. To get a better rate, it’s advisable to schedule an appointment with your lender to negotiate for better terms. They probably can’t offer you the same rate you would get if you switch providers, but you can still work with them to get a better rate than what they may try to offer you. There is no reason to just accept the first offer as some negotiation can benefit you.

The Best Lender from the Past Might Not be the Best Today

The financial goals you had when you took on your current mortgage are probably different today. You may be in a new stage of your life and your lender is probably in the same boat you are. You might decide to stay with your current lender as we all like convenience, but your renewal might come with a higher rate. The terms and conditions that they offer you now, might not work for you. It’s important to consider your needs before you sign such as repayment options, the rate, and other factors. You need to find a lender that can meet your needs whether that is your current lender or a new one.

Rate Holds

Once you sop for the best rate and find a lender that you’re happy with you can ask for a rate hold. Many lenders will offer a hold for up to 90-120 days. They promise that you can have the same rate and that rates won’t go up even if the mortgage rates do. All you need to do is come back within 90-120 days to get that rate. If the mortgage rates go down during the hold period, you can negotiate for the lowest rate. A rate hold provides you with security since you may be worried that the rate may rise before you’re in the market to renew.

It Takes Time to Switch Providers

If you want to switch providers during the renewal process, you need to ask the mortgage broker to start this process right away. The criteria of your new lender may be different from your current one and you need to submit your mortgage application to them. You need to send a mortgage renewal letter, proof of home ownership proof of income, and proof that you own property insurance. It takes more than a week for most brokers to make a switch, so you need to start this process early. You don’t want to be stuck with your old lender for another term and the higher rates.

Many Providers Do the Switch for Free

When you switch providers there can be fees such as the costs of discharging the mortgage and an appraisal fee from the lender you have now. Many providers will offer to do the switch free of charge and cover the costs to get your business. You may have to negotiate a bit so ask your new lender if they will do this before you simply pay them yourself.

Refinance When You Renew as This is the Best Time to Do So

You can access equity by refinancing your mortgage, so you should do this when it comes time to renew your mortgage. Refinancing usually means you need to break your mortgage term and there can be repayment penalties that are quite large. When you refinance during the mortgage renewal process the mortgage term isn’t broken and you don’t receive that repayment penalty.

Summary – Renewal Tips

These tips should help you renew your mortgage. There are concrete steps you can take to make the process easier for you and your family, so you can lock in better rates. Take advantage of the options you have available to you when you renew.