Has the term of your mortgage come to an end, and are you wondering if you should renew? Here are ten common questions to ask yourself before renewing your mortgage.
Has anything changed in my life situation? Since the start of the mortgage term, has your income increased, or have you lost your job or experienced illness? Any of those examples can affect what you can afford for mortgage payments. By asking this question, you will be able to find the best renewal option to fit your lifestyle.
Do I know the difference between a Mortgage Term and Amortization? A term is the length of your mortgage agreement, usually a period of five years. At the end of that time, the term is known as the maturity date. Amortization is the number of years you will need to pay off your mortgage, usually around fifteen to thirty years
What are my end-of Mortgage Term options? You will have a few options. You could pay off your mortgage balance or renew the mortgage for another term. You will need to consider several factors before deciding on the type of mortgage and term for you.
Is there a difference between Open and Closed Term Mortgages? An open term lets you make additional payments with any amount, also allowing you to pay off your mortgage in full. It is very flexible but usually has to pay higher rates. A closed term has few options and less flexibility, but a lower interest rate.
What length of the term do I want? First, consider your personal situation and discuss it with your broker. Also think about if you are wanting to pay off the mortgage early, what rates are available, what life changes are happening, and any interest rate forecasts.
What are Variable Rates and Fixed Rates? Variable rates can be a bit risky, as you can end up paying more interest if prime lending rates increase. Variable rates adjust with prime lending rates though, so if rates go down, you can pay off your mortgage quicker. Fixed rates are just that, the interest rate and payments are fixed, they stay the same until the term ends. Fixed rates can provide security if you are on a budget.
What if my income budget has changed? Remember, you don’t need to re-qualify to renew your mortgage. Don’t be afraid to ask your broker or lender to work with you to help you with your current financial situation.
Do I need to factor an inheritance into my mortgage renewal? If you know you are getting an inheritance or other type of a large amount of money, think about getting an open term mortgage.
Am I going to sell my home during the term of my mortgage? Situations may occur that encourage you to move or sell your home. Mortgages can be flexible, you can blend, extend or get a portable mortgage. If you qualify for a mortgage with your new house, you can transfer your mortgage over if you want to take it with you.
How soon can I lock in a mortgage term? About 150 days before your mortgage term ends, you should start thinking about your current situation and what options would be good for you. You can decide on a new mortgage term 120 days before your term ends.