Most Canadian homeowners think their mortgage is a “buy and hold” purchase. They get one and then wait for it to come due. Mortgage planners recommend you review your mortgage once a year to see if it still fits your financial situation. You can choose to do this at any time but many in the industry recommend the fall, when kids go back to school. While they’re studying in a classroom, you might as well study your mortgage picture with a qualified and experienced mortgage planner.
A lot can happen in a year, especially to one’s finances. This means the mortgage you acquired a year or more ago may not be ideal for your current financial situation. If you’re still unsure here are some reasons to review your current mortgage:
- You’re thinking about buying a new home in the next couple of years.
- You need funds to renovate your residence.
- You’re thinking about purchasing a second home for either vacation or investment purposes.
- You have a big expense looming (university tuition, wedding, new vehicle, vacation).
- You’re making more or less money than you were when your mortgage began.
- You’re carrying a lot of high-interest debt and you need to increase your monthly cash flow.
- You need to increase your retirement savings.
- You want to take advantage of today’s amazing interest rates.
Another time to review your mortgage is when it’s up for renewal. Those with good payment histories will be contacted by their lenders prior to their mortgage’s expiration date. Nearly three-fourths of homeowners renew their mortgage without asking any questions. There’s nothing wrong with that but mortgage planners recommend you review your mortgage at least four months prior to its renewal date.
If you do decide to get a new mortgage, and you’re approved, your new rate will be guaranteed for about 120 days (it depends on the lender). Remember, you’ll get a lower rate if it drops during your waiting period!
Switching mortgage companies may cost you discharge, legal, and appraisal fees but discussing your options with a qualified mortgage planner is free. Hopefully, you’ll get such a great rate that the fees won’t matter.