Renew or Refinance Your Current Surrey Mortgage

There is a big difference between a Refinance mortgage and a Renewal mortgage.  Your lender will want you to renew without any questions asked, however, a better interest rate might be available to you.  Never accept the lender’s first offer!

· Renewal You are just choosing a new term and interest rate but the amortization rate and loan amount are staying the same.
· Refinance The amortization schedule and/or loan amount is changed from the initial loan to to pay it off slower or faster.

When choosing your renewing or refinancing mortgage options, it is important to consider how your default insurance might be changed.  If there is a change in insurance status, it will also adjust your mortgage payment amount.


Mortgage Renewal

There is a big difference between a renewal mortgage and a refinance mortgage. With a refinance, the amortization schedule and/or loan amount changes, whereas with a renewal you are choosing a new term and interest rate.

If you change the amount of the loan or the amortization rate, it counts as a refinance. Only mortgages where the current term is up and it is being renewed under the same parameters for amortization and amount currently owing, is it a renewal. This might seem like a small difference, and it is, but it is very important if you paid mortgage insurance when you bought the property.

It is very important that if you paid mortgage insurance when you got your original mortgage to not re-finance and if you choose to renew, not to take the first offer the bank gives you. Call us at 604-816-5988 and we can explain this more.

“Almost always reject the 1st rate offered to you by your lender when renewing unless you have worked with their mortgage specialist and already negotiated the rate down. “

Unfortunately lenders treat their existing clients, who they have made tens of thousands of dollars off already, worse than new clients that walk in off the street. New mortgage applicants get low rates and so should customers renewing their mortgage!

Just Say No to the renewal rate 1st sent to you by your lender!

As your mortgage broker, you will have your own professional mortgage rate researcher.  We have access to rates and lenders beyond the big banks’ advertised products. It takes time to switch lenders so don’t leave the process until the last minute. The best course of action is to start as early as possible as you have to re-submit a mortgage application and have it approved by the new lender.


Mortgage Refinance

If you are Refinancing then it is for a important reason. Some of the reasons people choose to refinance a mortgage loan is so that they can borrow money to travel, renovate, make a large purchase, or even pay for school. Others are:

  • Consolidate debts – If you have enough equity in your home and also a bunch of consumer debts, you can consolidate your debts (such as car loans, credit card bills, and line of credits) through refinancing. This will allow you to pay off high-interest loans with a lower interest loan.
  • To free up cash – When you refinance you can access up to 80% of your home’s value minus any outstanding mortgage balance.
  • Get a lower interest rate – Depending on the penalty for breaking your mortgage contract early, refinancing for a lower interest rate can save you money over time.

There can be costs and penalties involved in refinancing your mortgage because you are breaking the current term if it is not maturing.

  • Penalties – 3 months interest or the Interest Rate Differential are the most common penalties
  • Costs – A renewal is usually pretty easy with no new appraisal being done if there is lots of equity type thing. With a re-fiance you are basically getting a brand new mortgage and so will need an appraisal along with other costs

There are a few options for refinancing your mortgage, these are:

  • Break your existing contract early – The reason you would choose this option would be if you are wanting a lower interest rate or to access equity from your home to make a large purchase. This option requires you to terminate your existing mortgage and replace it with a new mortgage.
  • Add a home equity line of credit – This allows you to free up cash from the equity of your home to use when needed.
  • Extend and Blend your existing mortgage loan – your mortgage lender may offer you the option of a blended rate which essentially is your current mortgage rate plus any additional money you want to borrow at the current market rates. Be aware that blended rates are typically higher than most competitive rates on the market so be sure to compare and make sure this is the right option for you.

I’m always happy to schedule an in-person meeting or phone call if you have any questions or concerns regarding your Surrey mortgage.
Jaret Forman