Here at Donna Mullen & Associates, we want to help more people become homeowners, and we want to help current homeowners make the best possible choices when it comes to their mortgages. If you own a home and are approaching the time for mortgage renewal, we encourage you to give us a call to consult with our experts about your options.
While some mortgages auto-renew, it is worth taking the time to understand the renewal process so that you can take steps to get the best possible outcome. In this article, we’ll cover some key things you should understand about mortgage renewal before you begin the process.
What is a Mortgage Renewal?
First, let’s discuss what mortgage renewal actually means. In our experience, many people are surprised when their mortgage agreement comes up for renewal, as they were focused solely on the amortization, or the 15-, 20-, or 30-year period they have to pay the mortgage off. Mortgage renewal, on the other hand, is based on the current term, which is a shorter period (typically 5 years) in which the current mortgage agreement stands.
When it’s time for mortgage renewal, you essentially get the chance to renegotiate some of the terms of that agreement to suit your current situation. For example, if you want to be able to pay off your mortgage faster, you may want to renew for an open term, which will give you greater flexibility in how often you can make payments and in what amounts. Renewing for a closed term, on the other hand, will give you less flexibility but a lower interest rate.