The mortgage renewal stage is one of the most significant occasions for the owners. Before your mortgage comes to an end, one and a half years to be precise, it is time to review your goals and objectives, analyze your financial status and as a result come up with decisions that are very beneficial as one makes his/her decision in future. Below are five crucial tips that can assist you when it comes to the renewal of the mortgage.
Tips for Mortgage Renewal Time
1. Start Early: Mortgage Terms to Review
Another issue that most homeowners fall into is the fact that they do not start planning on mortgage renewal until the last moment. This is advantageous because as you start early on your search well in advance, you are already in a position to make sound decisions. Usually, your lender will inform you about this and your mortgage renewal at 3 to 4 months to the term’s end. This will be a good time to consider the terms of your current mortgage such as the interest rates that are charged, payment options and if it is possible to make extra payments.
Has there been a change of circumstances financially or you wish to make your mortgage shorter then there is need to determine whether the current terms are suitable for your needs. It also gives you the bargaining power by starting the renewal process early enough to negotiate for better terms with your current financier or to have a better understanding of the market through the other financiers.
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2. Search for the Best Rates
Being loyal to your current lender might not always pay off in terms of financial gains. Although it may be easier, borrowers often refinance with the same lender, but it is important to compare the interest rates available in the market. Mortgage costs and conditions differ from one company to the other and what was a good offer five years ago may not be this good now.
Do not fail to compare the interest rates of the various institutions such that they may range from traditional banks, credit unions, and even the new age online lenders. They are calculated off the life of the mortgage and even with a quarter change in the interest rate it can equal thousands of dollars. If you come across a better deal that has a lower interest rate search for your current provider to offer a lower rate or match that of the competitor to retain you.
3. Consider Your Financial Goals
Since mortgage renewal time is a time for change, it is a perfect time to review one’s financial objectives. Do you want to build up home equity faster or have more cash available to cover other everyday living expenses? In this case, there exist various types of mortgage products that one may prefer depending on their preference.
For instance, if you aim to pay the mortgage earlier, you can choose a shorter amortization period, or through the payment of higher frequencies. On the other, if cash is tight for you, there is nothing better than going for an extended amortization period, or indeed, deciding to take a fixed-rate mortgage where your payments are constant. Always ensure the mortgage that you take fits your general financial plan and should therefore take time to evaluate the best you.
4. Evaluate Prepayment Options
Prepayment facilities enable you to make further payments towards the loan balance thus paying off your home loan earlier than initially agreed. Before following this guideline, keep in mind that prepayment privileges differ depending on the lender when renewing your mortgage.
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Some of the lenders provide more flexible repayment terms depending on the customer by allowing additional and more frequent instalments or balloon payments. If you are in a position to pay off your mortgage early, this aspect can help you save lots of money, depending on the repayment terms of the lender’s contract.
5. Seek Professional Advice
Applying only some level of effort, a homeowner can easily be overwhelmed by the mortgage renewal process because of the many choices out there. Consulting a suitable mortgage broker or a financial consultant can prove to be a great way of choosing what is best for you. Mortgage experts are also knowledgeable in mortgage products and have the ability to shop for offers, explain the terms, and possibly assist in securing better deals.
A mortgage broker can also consult you on current market conditions and predict an increase in interest rates before providing recommendations to you. But these companies charge for their services. Besides they charge, It can still be cheaper, quicker, and less stressful in the long run to hire them.
Conclusion
Mortgage renewal is a wise move and it has far-reaching consequences on your financial status in the future. If you begin early, compare offers, decide on what you want from your mortgage, familiarity with advance payment provisions, and consult with a specialist, you will be a part of changes that positively influence your financial experience. Spend the time and work through your circumstances and try to get the best deal so that you can continue to make the mortgage advantageous to you.
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