Canadian Mortgage Renewals & Refinancing To Access Equity - How It All Works!

Your Canadian mortgage is coming up for renewal. Now what?

If this isn't your first renewal, you may already have the date marked in your calendar. But did you give yourself enough time to shop around? I always recommend that homeowners set a reminder for 90-120 days BEFORE renewal so you can explore the options available to you and make some important decisions -- with time to spare!

If this is your first renewal, you may not even realize it's time to renew until you get a renewal notice from your bank. If that's the case, you won't have much time to shop around so knowing what to do and expect is even more important!

The lesson here?

Don't wait for your existing Canadian mortgage lender will send you a renewal notification with a rate and terms when your mortgage is up for renewal. Be proactive and understand your dates to make sure you have time to explore and consider your options.

Ok, so now that you know your renewal date. Let's talk about what happens next.

First, decide if you want to tap into your equity.

Given the rapidly increasing value of homes in Canada, come renewal you may have a good amount of equity to tap into.

If you wish to access that equity, a refinance. To avoid fines for breaking your mortgage, you can organize a refinance for the date of your renewal. You have the option of refinancing with your present lender but you may have access to better options and/or rates by shopping around.

And, no, there's no requirement to prove what you'll be using these funds for. We find our clients are using equity to consolidate high-interest debt, boost investments, purchase a car, landscape, add a deck or build a pool, for example.?If the refinance is mostly for renos, for example, I may note that on the application but it's not a deciding factor.

Ok, then what?

Find a mortgage agent or broker you can trust and follow their instructions to get specific answers. Something else to consider is that not all agents and brokers have access to the same lenders. Some of us big players do have the lender relations in place to access products, options and rates that some smaller teams or independent agents may not have access to.

Also, keep in mind that a low rate does not always imply it's the best mortgage. It all relies on your short-term and long-term goals and needs, so don't get caught up in the race to the bottom - read the fine print.

"Will renewing or refinancing be similar to the process of buying as far as being approved etc?"

Essentially, yes, but the specific requirements will depend on if you're just renewing or tapping into some equity with a refinance. You will need to provide documentation proving income, investments, employment, etc. All that good stuff. A refinance is basically a new mortgage.

What's the timeline?

We can generally work as quickly as our clients can get us any documentation required. If we can gather all the required details in one day, our in-house underwriters can get on it right away and we usually have options available within a day or two, if the lender isn't backlogged.

And, did you know? The rates are determined based on the application date and not the approval date so if things go up between when we submit your file to the lender and when they come back with the approval, you'll get the rate that was in place on the day your file was received.

So, what do I do first?

Talk to your broker or connect with us to determine which options are available to you and to plan your next best move.