Mortgage renewals are a crucial financial moment for homeowners, yet many people don’t realize how much they could be overpaying if they don’t take the right approach. Whether you’re renewing in a high or low-rate environment, making the wrong decision can cost you thousands over the life of your mortgage. Here’s what you need to know before signing your next renewal offer.
What is a Mortgage Renewal?
A mortgage renewal happens when your current mortgage term ends, and you need to either renew with your existing lender or explore other options. Most lenders send renewal offers 30 to 120 days before your term expires, but simply signing without reviewing your options can be a costly mistake.
Why Your Mortgage Renewal Matters
Your renewal isn’t just a routine process—it’s an opportunity to reassess your financial goals and potentially secure better terms. The mortgage market changes constantly, and rates fluctuate based on economic conditions. If you originally locked in at a low rate, you could face “payment shock” when switching to a higher rate.
For example, let’s say you had a $500,000 mortgage at 1.60% on a 25-year amortization. Your monthly payment would have been around $2,012. If you renew today at 4.80%, that same mortgage could jump to $2,859/month—an increase of $847 per month!
How to Reduce Payment Shock at Renewal
✔ Start Early: Don’t wait until the last minute—begin reviewing your options at least six months before renewal.
✔ Shop Around: Your existing lender’s offer isn’t always the best. Other lenders may offer lower rates, better terms, or cashback incentives.
✔ Consider Extending Amortization: If your payments become unmanageable, stretching your mortgage to a 30-year amortization could lower monthly costs.
✔ Work with a Mortgage Broker: A mortgage expert can compare multiple lenders, negotiate on your behalf, and find the best renewal strategy.
Final Thoughts: Make Your Renewal Work for You
A mortgage renewal is more than just paperwork—it’s a chance to optimize your finances and secure a better deal. Whether you’re renewing now or in the future, planning can help you save money and reduce stress.
Need expert advice? Contact us today for a free mortgage renewal review!
