Mortgage renewals can be a great way to find a better housing loan. Renewing a mortgage in 2018 has become a little more complicated due to the new B20 stress test rules. What are the secrets to maximizing housing loan renewals in 2018?
Are there significant advantages to checking with multiple Edmonton mortgage brokers? How can homeowners get the best mortgage rate? Learn why you should plan the renewal phase with a qualified mortgage broker.
Canadian Housing Loan Renewal
Canada has a very vibrant mortgage renewal system that is characterized by more short-term loans (i.e. five years) than other nations. What this permits is a more flexible housing finance system that is highly dependent on market interest rates.
When your mortgage is up for renewal, you need to review your financial situation. Are you happy with your present mortgage? Is there anything that you want to improve? What are the current mortgage renewal market conditions?
2018 Mortgage Market
After the 2008 Credit Crunch, the Government of Canada lowered interest rates to increase economic activity. Homeowners had very low-interest rates for about a decade. Unfortunately, the new mortgage B20 stress test of January 1, 2018, ended all that.
And, the timing seems to be perfect. A CIBC Report stated that nearly half of existing mortgages face renewal in 2018. That is very high.
The average should be about 20%, so did regulators time their new stress test for 2018 to have the biggest impact?
Renewing a mortgage in 2018 could be more difficult due to the new stress test. This is one of the reasons why you might want to look at multiple mortgage brokers from Advantage Mortgage. The following is a cold, hard truth:
You might not pass the stress test, even if you had no problems qualifying previously.
Unfortunately, some Canadian homeowners with stellar credit and income, who qualified previously might not pass the stress test this go-around. That is what worries many mortgage brokers. They fear this new mortgage refinancing stress test will dampen demand.
How are you supposed to handle these changed circumstances? With one mortgage broker, you have very limited options. With Advantage Mortgage, you have access to multiple mortgage lenders, each allowing you to optimize your loan options and maximize your chances of approval.
When to Start your Mortgage Renewal
Due to the new 2018 stress test, we suggest that you start considering your options a couple of months before your mortgage is up for renewal. This gives you time to research the market to see the range of interest rates available. You can save time by researching multiple brokers at Advantage Mortgage – all at once.
Should you expect any documentation in your mail before your housing loan renewal?
Yes, federally regulated financial institutions must send you a renewal statement at least 21 days before the end of your present mortgage term. This statement must be in paper format, but you can also request an electronic version. Here are the features of the mortgage renewal statement:
- Remaining Balance
- Interest Rate
- Payment Frequency
- Charges or Fees
The lender might include a mortgage renewals contract with your statement or might also decide not to renew your mortgage. You can pay off your entire balance or find a new lender to renew your mortgage.
What features should you consider during housing loan renewal?
Things to Consider During Renewal
The simplest plan of action is to renew your mortgage automatically. Read the fine print – in some contracts, if you do nothing, the mortgage will automatically renew. Unfortunately, your automatic renewal mortgage interest rate might not be the most competitive.
You might want to consider the following four issues: 1. Stress test, 2. Satisfaction level, 3. Interest rates and 4. Repayment terms. Maximize your mortgage renewal by finding an Edmonton mortgage broker offering the best terms and conditions.
1.) New B20 Stress Test
If you switch lenders for your mortgage renewal, then you might be forced to pass the new B20 stress test. This requires you to qualify at higher interest rates. Can you pass the stress test?
Unfortunately, the days of lower interest rates may be over. You should expect higher rates. This can be a sticker shock for some.
This is one more reason why you might want to find a private lender. Advantage Mortgage offers access to several lenders so that you can compare their rates. This is how you get the best mortgage rate possible.
2.) Faster Repayment
Have you had a good year, financially? Did you inherit money? Some borrowers choose to pay off their mortgage faster. You might feel free and unencumbered without a mortgage.
Increasing your monthly payment is a possibility. Or, you could even set up bi-weekly payments to double the rate of repayment. Faster repayment could be beneficial.
3.) Debt Consolidation
Modern lenders also allow you to consider debt consolidation services. You could combine credit card, automobile and housing loans together. Instead, of multiple due dates, you only have one.
4.) Are You Satisfied?
Are you satisfied with the services of your present lender? At Advantage Mortgage, it is easy to switch. Simply peruse the services offered by any of our brokers – we have many brokers to choose from.
Negotiating Interest Rates
Banks with a monopoly on your business will not offer you a better rate. Why should they? If you are considering multiple mortgage brokers from Advantage Mortgage, then you have leverage during negotiations. Different brokers might offer better features to win your business.
You don’t even have to decide to go with Advantage Mortgage in the end. You can simply explain to your present lender that you are considering better terms and rates from Advantage Mortgage. That will force your present lender to offer you a lower, more competitive interest rate.
Contact Advantage Mortgage for assistance renewing your mortgage in 2018
When there is uncertainty in the mortgage refinancing market, as there is in 2018 due to the stress test, it pays to take advantage of all your options. At Advantage Mortgage, you can work with multiple mortgage lenders – one might not have what you want, but another might. This allows you to find the best rates possible.
Maximizing your mortgage renewal could include your making a list of priorities. Then, find a mortgage broker offering those features. Plan ahead and you can come out smelling like roses for your mortgage renewal.