After you obtain a mortgage, you will not have to do much with your mortgage during its term except, of course, to make sure that you continue to make your mortgage payments.
Near the end of your term (remember, term = the length of time of your current mortgage agreement with the bank), your bank will usually send you a letter or contact you via telephone to ask you if you would like to RENEW your mortgage.
The date at the end of your term is called the mortgage MATURITY DATE.
When your Maturity Date gets near, the bank will offer you a term and a rate according to their current rates. You will not be able to renew using the terms of your previous mortgage term. In other words, if your interest rate for Term 1 was 3.5% but interest rates are 6% at the time of your renewal, the bank will offer you the 6% interest rate.
It is very important to keep in mind that some banks will NOT offer you their best rates upfront. Many home-owners automatically sign their renewal notices without giving it much thought. I HIGHLY recommend getting a second opinion from a Mortgage Broker BEFORE you sign your mortgage renewal agreement, as this could save you thousands of dollars.
It is also important to keep in mind that all banks offer different rates. Some banks are more competitive with their rates, while others focus on other areas of banking.
The best thing for any person to do is to contact a mortgage broker (like me!) approximately 4 months before your mortgage is set to MATURE.
A mortgage broker will be able to get you a RATE HOLD for 120 days. Having a Rate Hold ensures that you will be getting the best rate possible. For instance, if your mortgage broker secures you a rate hold of 4% and, 60 days later, rates have gone up to 5%, you will still be able to get the 4% mortgage rate.
Again, the most important thing that I can teach anyone about Mortgage Renewal is to always get a second opinion before you sign. Just like in a relationship, you don’t want to settle or commit until you know that you’re getting the best there is out there!