Understanding Mortgage Renewal in Montreal: What You Need to Know

February 10, 2023MortgagesNo Comments »

Understanding Mortgage Renewal in Montreal: What You Need to Know

If you’re a homeowner in Montreal, understanding mortgage renewal is an important part of managing your finances. When your mortgage term comes to an end, you have the option to renew your mortgage with your current lender or to switch to a new lender. Here’s what you need to know about mortgage renewal in Montreal.


What is Mortgage Renewal?


Mortgage renewal is the process of extending your current mortgage for a new term. At the end of your mortgage term (usually 1-5 years), you have the option to renew your mortgage for a new term with your current lender or to switch to a new lender. When you renew your mortgage, you’ll be offered a new interest rate, new terms, and new conditions, which can all affect your monthly payments and overall costs.


When Should You Start Thinking About Renewing Your Mortgage?


It’s a good idea to start thinking about renewing your mortgage about six months before your current mortgage term expires. This gives you time to shop around for the best rates and terms, and to negotiate with your lender if necessary. It’s important to note that your current lender will likely send you a renewal offer about three months before your mortgage term expires, but you don’t have to accept this offer.


How Do You Find the Best Renewal Rates?


To find the best renewal rates for your mortgage, you’ll need to do some research. Start by comparing rates from different lenders, including your current lender. You can do this online, by contacting lenders directly, or by working with a mortgage broker. Be sure to ask about any fees or penalties associated with switching lenders, as well as any other conditions that may affect your renewal.


What Factors Affect Renewal Mortgage Rates?


The interest rate you’re offered for your renewal mortgage in Montreal will depend on several factors, including:


  • The current state of the housing market
  • The Bank of Canada’s overnight lending rate
  • Your credit score and credit history
  • Your income and employment status
  • The amount of equity you have in your home

It’s important to note that renewal rates may be different from the rates you were offered when you first took out your mortgage. This is because the housing market and interest rates are constantly changing.


Should You Choose a Fixed or Variable Renewal Rate?


When renewing your mortgage, you’ll have the option to choose between a fixed or variable rate. A fixed rate means that your interest rate will remain the same for the duration of your mortgage term, while a variable rate means that your rate will fluctuate with changes in the market. There are pros and cons to both options, so it’s important to consider your own financial situation and risk tolerance when making this decision.


What Happens if You Don’t Renew Your Mortgage?


If you don’t renew your mortgage, you’ll default on your loan and your lender will take steps to recover the money they’re owed. This could include taking legal action, selling your home, or garnishing your wages. To avoid default, it’s important to start the renewal process well before your current mortgage term expires and to keep your lender informed of your intentions.


What are Your Options for Renewing Your Mortgage?


When renewing your mortgage, you have a few options to choose from. These include:


  • Sticking with your current lender: You can renew your mortgage with your current lender at the interest rate and terms they offer you.
  • Shopping around for a new lender: You can compare rates from different lenders to find the best renewal offer. This can include negotiating with your current lender to see if they’ll match or beat the rates offered by other lenders.
  • Refinancing your mortgage: You can refinance your mortgage by borrowing more money to pay off your existing mortgage and other debts. This can be a good option if you need to access equity in your home

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