Many British Columbia homeowners face the situation every few years: the time your mortgage term will be expiring. Yet, it doesn't have to be a stressful experience if you know what to expect. You may be up against different interest rates, and you also might be thinking about finding another lender with more attractive rates. Being aware of how to avoid potential drawbacks will give you a head start when renewal or refinance time actually rolls around.
Renewing your mortgage is actually a great time for you to think about how well your existing arrangement has been fitting into your day-to-day life and how it marries with your current financial footing. Depending upon the term of your initial mortgage - whether that was for five or more years - your financial picture may be a little brighter and you may be able to afford higher payments. If lifestyle changes have occurred over the last few years, these could potentially reflect in your mortgage renewal or refinance terms.
The interest rate debate
Usually, for most people when renewing or refinancing a mortgage, the primary issue is getting the best interest rate possible. That might not always be the best factor on which to base your decision. Mortgages with low rates could come with costs you weren't expecting, such as penalties if you ever decide to pay the mortgage down earlier than you estimated or for transferring the mortgage to another home or business. Looking into the fine print could save you some grief and money in the end.
When shopping around to renew or refinance your mortgage, you might want to do the following:
- Consider looking at institutions that offer a number of different services with variable terms and rates.
- Consider seeking the advice of a mortgage broker who could look into various options for you.
- Consider speaking to different lenders to see how they might be able to help you.
When looking at what different lenders can offer you in financing your real estate transactions, taking stock of the differences in mortgage penalties may help your own financial situation in the future. Many lenders will simply focus on interest rates without pointing out the potential pitfalls of individual mortgage terms.
A mortgage refinancing could also potentially swallow other debts you may be carrying, such as a line of credit. If you're refinancing to receive quick cash -- for a quick closing on a purchase, for instance -- a three-week time limit is usually a good rule of thumb.
Mortgage renewal or refinancing can actually be a chance for you to obtain better mortgage terms. An experienced lawyer may be able to help you when it comes to looking over those terms to ensure that you ultimately choose the option that bodes best for your current and long-term financial situation.