What to do if your mortgage is up for renewal:
It is 2024 and we are coming into a renewal cycle for the next 3 years that will see BILLIONS of dollars worth of mortgage renewals coming up for Maturity and many of those will see what we call PAYMENT SHOCK. This happens when your mortgage payment jumps up substantially upon renewing into a new mortgage term.
With rates being 2 to 3 times HIGHER than rates in 2020 and 2021, this is going to be tough on many homeowners. So this begs the question.
WHAT DO I DO!?
We need to start asking questions to ourselves, here are some questions to ask yourself:
- Is it getting the lowest rate to have the lowest payment
- Are you looking for stability in payment
- Where are rates going? Ask what both fixed and variable rates are doing.
- Will I be tempted to break my mortgage to get into the lower rates, if they drop?
- What would be the cost to break my mortgage with these higher rates?
- Is there a product where I can convert my mortgage to lower rates with no penalties?
- Is refinancing an option? Do I have enough Equity to do so?
- Can amortization be extended?
The reason I prompt you with these questions is because it isn’t a one-size-fits-all solution. Some people need the lowest payment option. Others are more flexible and can take a slightly higher rate to have a shorter term (this comes with the belief that rates will drop over the next few years). And some may even take the variable rate (yes this is a great option).
The biggest takeaway is to ask questions and get a 2nd opinion. Talk and ask about different strategies and how each would like for you.
I have seen some lenders offering rates over 1% ABOVE what the market is, so YES you can save money and negotiate on your renewal! There are pros and cons to every solution, it is just a matter of finding out the solution that works best for you.