When it comes to renewing your mortgage, there is no one-size-fits-all solution. You may need the best rate, a longer term or a lower payment. That’s why it’s important to choose a renewal strategy that fits your life plans.
Here are three key things to keep in mind to find the right mortgage deal for you.
Don’t wait until the last minute to store
When it comes to renewing your mortgage term, it’s important to start shopping around early.
While your current lender may offer a penalty-free renewal, it is also likely that they cannot offer you the best mortgage rates available. Some people are happy with these terms and will accept them immediately to protect themselves from the rate increases that have been occurring for some time.
Others, armed with the financial institution’s offer, will prefer to look elsewhere to try to obtain a better proposal.
That’s why it’s essential to get informed and consult a mortgage broker to find the best scenario for you. Plan diligently to save on your mortgage payments in the years to come.
Choose a fixed or variable rate
Variable interest rates have always been more advantageous than fixed rates in over 90% of cases for decades. However, the choice between a fixed or variable rate depends on many factors and there is no absolute certainty.
Fixed rates allow for payment stability over a period of time, which is beneficial to those looking for stability. However, variable rates are more advantageous over the long term if interest rates fall. It is important to consider factors such as the term of the loan, long-term economic outlook and risk tolerance before making a decision.
We recommend that you consult a mortgage specialist to assess your options and find the right solution for your situation.
Currently, the three-year fixed rate is about 4.89% while the variable rate is 5.85%. By choosing a variable rate mortgage, you will be paying an additional $167 each month, or more than $2,000 per year. However, it can be difficult to predict when the variable rate will drop below the fixed rate. That’s why the trend toward fixed rates is more important to consumers these days.
Choosing a financial institution
Financial institutions and mortgage brokers offer interest rates with a notable difference. Currently, the best three-year fixed rate is 4.89% while the highest is 6.14%. If you borrow $300,000, you could save $218 per month or $2,620 per year by choosing the best rate. Over a three-year period, this translates into an impressive savings of $7,862.
This is a difference to consider when choosing an institution!
Looking for a mortgage expert?
Use a broker at REALTA. Our real estate experts are here to guide you through the process and help you find the mortgage broker that best suits your needs.
Thanks to our solid network of partners, we can put you in touch with experienced professionals who can answer all your questions.