Read this BEFORE you sign a mortgage renewal or transfer agreement with the same lender!
There are two key time periods associated with every mortgage. The first is the amortization period. This is the total length of time expected to completely pay off the mortgage. Amortization periods are usually about 20 years.
The second key time period is the term. This is the duration of your agreement with the lender and is usually five years or less. What this means is that while the lender expects it to take 20 years or more to pay off your mortgage loan, they are only agreeing to lend you the initial amount for a five year period at the agreed interest rate. So, when the term is up or you want to sell one home to buy another, you essentially need to pay back all that is still owing. To do this, the lender will want you to “renew” or “transfer” the mortgage but this actually means signing a new agreement to borrow what is still owing.
While this may sound complicated, the bottom line is that you DO NOT have to renew or get the mortgage on your new home with the same lender; and it is definitely worth the time and effort to shop around for a better deal on this new loan. The GREAT news is, that we will actually do the shopping for you.
As mortgage brokers, we have access to many different types of lenders – not just the big banks. This is a tremendous advantage to you, not only because we may find a lower interest rate, but also because private lenders are more willing to offer loans to those who may not qualify for the stricter bank criteria.
There may be other benefits as well. Since you are taking out a new loan, you may be able to:
- borrow more than what is owing, using the additional cash to pay off other debts
- lower or increase your payment amount, depending on your current circumstances
- change when you make your mortgage payments, to pay less interest overall
- gain the option of making a large lump sum payment more frequently
- make changes to lower taxes
So, even if you haven’t used our Real Estate services, if the term of your mortgage is coming to an end or you are selling one home to buy another, please call us to learn more about how we can help you save money!!