Mortgage Renewals: A Strategic Approach for Homeowners
When it comes to mortgage renewals, timing is everything. Many homeowners may find themselves wondering when the best time is to reach out before their mortgage renewal. In this blog post, we'll explore why sooner is better and how proactive steps can lead to being better prepared at renewal time.
Anticipate Changes and Formulate a Game Plan:
Acting early is important, especially if there have been changes to your financial situation, such as credit, income, liabilities, or employment. By addressing these changes in advance, we can formulate an effective strategy to tackle potential issues before they become roadblocks during the renewal process.
Existing Lender Outreach:
Your current lender might approach you anywhere between 30 to 90 days before the renewal date with options to renew with them. While this is common practice, it's not always the best idea to sign immediately. Understanding all available options is essential to making an informed decision.
Evaluate Your Financial Landscape:
Mortgage renewals provide an excellent opportunity to evaluate your overall financial situation. Assess your cash flow, consider high-interest debts, and explore the possibility of pulling out equity. If cash flow is a concern, extending the amortization or consolidating high-interest debt into your mortgage can be a strategic move. Perhaps your property increased significantly in value, and pulling out equity for something like an investment property may make sense (depending on your risk tolerance, budget, location etc.).
Consider Renewal with Existing Lender:
If major changes to your situation make qualifying with a new lender challenging, accepting the renewal offer from your existing lender may be a sensible choice. However, it's crucial to weigh the pros and cons.
Utilize the Expertise of a Mortgage Broker:
Regular communication with your mortgage broker is essential. At the very least, your mortgage broker should reach out to you annually for a mortgage check-in. Reaching out six months prior to your renewal leaves a good amount of time. This allows you to discuss your current status, address concerns, and explore potential opportunities.
With mortgage renewals, being proactive pays off. By reaching out well in advance, homeowners can navigate potential challenges, explore various options, and strategically position themselves for a successful renewal. Regular communication with a mortgage broker, coupled with a thorough evaluation of your financial situation, ensures that you make informed decisions.
Free Mortgage Audit:
Have an existing mortgage and curious where it stands? Maybe you have some questions? Reach out for a free mortgage audit to gain an understanding of your mortgage terms, rates, where they stand with the current market, and potential areas for improvement.