How to make the most of your mortgage renewal

 
Lower interest rate? Borrow more money? Why renewal time is one of the most important dates in every homeowner’s calendar.

 
May 2021  5 min read

As we move through life, our financial needs and goals change. Your mortgage renewal is a great opportunity to adjust your mortgage to better suit your life today and help you reach your financial and other goals sooner. 

Even if not much has changed since you took out your current mortgage, knowing your options when it’s up for renewal can deliver some big benefits when compared to the status quo:  

  • Put more money in your pocket by lowering your payments
  • Become mortgage-free sooner and save on interest
  • Access more money to pay for home renovations or another large expense

Good to know: You don't even have to wait for your renewal date to get a better interest rate. Renewing early can help you lock in to a lower interest rate with no penalty.  

Start by reviewing your goals and your current finances

Before doing anything, it's a good idea to review your finances. After all, a lot may have happened since you arranged your current mortgage. You might have changed jobs, earned a promotion, got married, had kids, or even retired... 

Here are some questions to consider as your mortgage approaches its renewal date:

  • Are you considering making a lump sum payment to become mortgage-free sooner?
  • Would making changes to your mortgage payment make life easier?
  • Would additional funds be useful? For example, home renovations, a child’s education or a large expense or purchase?

A CCCU lending expert can help you review your current budget and future goals.  

What are your best options?

Here are three options to consider as your mortgage renewal date gets closer:

1. Renew your mortgage or borrow more?

Renewing your mortgage is not your only option!  You can access equity in your home for refinancing. Here is a breakdown of renewing vs refinancing:


Renewing

  • Extend your term, for example from 5 to 10 years, with the option to make some other adjustments
  • An easy option if you don't need additional funds as there is no requalification required

Refinancing

  • Potentially increase your mortgage up to 80% of your home’s appraised value
  • Upon requalification this is a great way to finance larger expenses or consolidate your debt

Try our mortgage calculator to see what borrowing more looks like, and read Renewing vs. refinancing: What's the difference? to fully understand your options.

2. Make a lump sum payment

When your mortgage is up for renewal, you have the option to make a lump sum principal payment.  Here are some of the benefits:

  • Lower your monthly payments
  • Reduce how much interest you pay
  • Pay off your mortgage sooner

In fact, you have the option to make a principal lump sum payment every year, on the anniversary of your mortgage. You can pay up to 20% of the original borrowed amount with no penalty. 

Check out our mortgage calculator to see what you can save or how many years you can shave off your mortgage. Read Making a lump sum mortgage payment to get the full picture.

3. Adjust your payments

Another way to adapt your mortgage to any life changes, save money, or be mortgage-free sooner is to change the amount and frequency of your mortgage repayments. Your options include:

  • Increase payments to pay off your mortgage sooner and save on interest
  • Change your payment frequency, for example from monthly to bi-weekly
  • Reduce your payments by extending your amortization to improve your cash flow

You can do this once a year on or after your mortgage anniversary, with no penalty.  

Check out our mortgage calculator to see what the difference changing your payments can make. Read Changing your mortgage payments to help you make an informed decision.

Other things for homeowners to consider

Schedule some reminders: Home ownership is a journey. Your mortgage anniversary will come around again before you know it, and so will your renewal date. We'll always send you an email in advance. In the meantime, why not add an annual "Become mortgage free sooner" reminder to your calendar so you remember to consider your options each year? 

Review your home insurance needs: As your life changes, so do your home insurance needs. There are benefits to managing your mortgage and home insurnace in an integrated way. For example, you may want to cover a new kitchen, renovated basement or new work shop. Consider scheduling a chat with one of our insurance experts as your mortgage renewal date gets closer? 

Mortgage renewal time is a major milestone in everyone’s home ownership journey. We want to make sure you can make an informed decision about what to do next. You don't even have to wait for your mortgage term to finish. Renewing early can help you secure a lower interest rate with no penalty. Learn more about renewing and refinancing your mortgage here.  


Other topics to explore:

 Thinking about moving your mortgage?

 What do you need to refinance?

 How to save more and get the house you really want

 First home not so homey?

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