When an individual’s mortgage is up for renewal, the bank sends out a statement with its offer for a new mortgage. These initial mortgage renewal offers from the bank are not always the best mortgage rate, but because too many individuals are busy, they simply sign the form and send it back without a second thought. This is the easier way to renew a mortgage, but it may not be the best financial decision. There are often much better options for mortgage renewals available if you take the time to look!
The sad truth is that your bank may be sending you one of the worst rates possible for your mortgage renewal. Your financial needs and wants may have changed drastically since you signed your first mortgage. Perhaps you have secured a better paying job or you had a good raise. Maybe you have grown your family or want more money in your monthly budget. If you had a ten year mortgage, the chances that your needs have changed are significant. Lenders count on the fact that many individuals do not properly research their options for mortgage renewals and will just sign the form before mailing it back. There are always different options available, but you have to look for them. This takes more time, but the rewards are worth it. You will have a mortgage that suits your needs better.
The down side of mortgage renewals from a new financial institution is that there are additional costs associated with it. A new lender may require you to have your house appraised, and the appraisal fee will come out of your pocket. The lender needs to know the fair market value of your home and will order an appraiser to value your home. The fee for a home appraisal can cost up to $500. When you decide to switch lenders during mortgage renewals, the first lender will always charge a discharge statement fee. Every bank charges one of these fees, and it can cost up to $300. The last fee is a lawyer fee which you will be charged to register your new mortgage.
If you are looking at new options for mortgage renewals, good job! You are taking the initiative to find a better mortgage than what your bank is offering you. Each lender offers a slightly different mortgage so be sure to look at a variety of options. There are a number of websites and online resources that can help you with your search for mortgage renewals.