So you completed the paperwork marathon when you bought a home and now your mortgage is up for renewal. What is the process now?
When your mortgage is up for renewal, you have a few options available to you:
- Renew the existing balance with your current lender.
- Transfer your mortgage balance to a new lender that may be offering more competitive rates.
- Refinance your mortgage to take equity out of your home. This can be for any variety of reasons, ie debt consolidation, home improvement, student tuition, or investments.
To do a straight renewal with your existing lender requires very little paperwork on your part. You receive their renewal document with various term choices, you sign the renewal, and send it back. This usually happens approximately 2 to 4 weeks prior to the maturity date. The rates will be reflective of what the current market rates are. Some banks anticipate that you will not shop around for a better rate when you are at renewal, and may quote you higher rates than what is otherwise available for “new business.” There is usually no re-qualification, appraisals, or legal fees to proceed with a straight renewal.
If you decide that you want to leave your current lender, you will have to provide an updated application and updated income confirmation to let the new lender know you qualify for the financing. These are the same documents that are needed if you also decide to refinance to take equity out. The documents are as follows:
- Completed application, available here.
- Income/employment confirmation which will vary depending on what you do for your work.
- Confirmation of paid property taxes.
- Copy of fire insurance.
- If you live in a strata complex, confirmation of what your current strata maintenance fees are.
- Current mortgage statement to confirm the balance, maturity date, and remaining amortization.
- Land Title Act Form B. This document will be in the file that your lawyer or notary gave you at the time your bought your home. This is the registered mortgage document that is used at the Land Title Office. We review this document to determine if your mortgage is transferable, or if it has to be re-registered. An example of when a mortgage is not transferable, is if there is a line of credit component attached to the mortgage. If you do not have a copy of your Form B, we can obtain a copy for a small fee.
- The new lender may require an appraisal, although many times for a transfer, an appraisal is not required.
- There are no legal or re-registration costs for a straight renewal. The bank may have a standard renewal fee, but they often waive this upon request.
- If you have a transferable mortgage, to do a straight transfer of your mortgage to another lender, there are no legal fees. The bank you are leaving however, may charge a discharge fee. This fee can range from $75 to $300.
- If you do not have a transferable mortgage, and still want to leave for more competitive terms, you can still leave to go to another lender, but there will be a fee charged to have the mortgage re-registered. This can usually be done for a cost of approximately $700 +/-. This is the same cost if you decide to refinance.
If you decide that you want to refinance or transfer your mortgage to a new lender, ideally you want a minimum of 6 weeks before the maturity date to start the process. If you are concerned about where interest rates are headed and you want to protect a rate, we can secure a rate for you for 120 days before the maturity date.
If you have any questions about your mortgage renewal, or would like to protect a rate, feel free to reach out any time.