Nanaimo Mortgage Renewals and Refinancing

It is worth reviewing your options several months before your mortgage maturity date rather than waiting for your lender's renewal offer to arrive.

Starting early gives you time to compare rates, mortgage terms and lender options, review any changes to your income or debts, and determine whether you simply want to renew or make changes to the mortgage.

The Financial Consumer Agency of Canada specifically recommends contacting lenders and mortgage brokers before receiving your renewal letter. If you wait until the last minute, you may have less time to compare alternatives or complete the documentation required to switch lenders.

If your mortgage in Nanaimo, Parksville, Nanoose, Ladysmith, Duncan, Courtenay, Victoria or elsewhere on Vancouver Island is coming up for renewal, reviewing it early can help you make the decision based on your current needs rather than simply signing the offer you receive.

Yes. You do not have to renew your mortgage with your existing lender. At renewal, you can compare your current lender's offer with mortgages available from other banks, credit unions and mortgage lenders.

If you switch lenders, the new lender will still need to approve your application. There may also be costs such as discharge, registration, transfer, appraisal, legal or administrative fees, depending on how your mortgage is registered and the lender you choose.

Because your existing mortgage term is ending, switching at maturity generally avoids the prepayment penalty that can apply when you break a closed mortgage before its maturity date. Other switching costs may still apply, so those should be included when comparing offers.

Do not compare interest rates alone. Prepayment privileges, penalties, portability, mortgage registration and other terms can affect whether switching actually improves your mortgage.

A mortgage renewal generally means starting a new term for the remaining mortgage balance when your existing term ends. You can review the rate, term and lender, but you are essentially continuing to repay the existing mortgage.

A refinance involves making a more significant change to the financing. For example, you may increase the mortgage amount to access home equity, consolidate debts, change the amortization or restructure the mortgage for another financial goal.

A refinance normally requires a new mortgage application and qualification review. Depending on the situation, an appraisal and legal work may also be required.

Renewal is therefore a good time to ask a bigger question: do you simply need another mortgage term, or has something changed in your finances that makes restructuring the mortgage worth considering?

Potentially. If your home has sufficient equity and you qualify for the additional borrowing, you may be able to refinance at renewal and access part of that equity.

Homeowners may generally be able to borrow up to 80% of the home's appraised value through mortgage and certain home equity financing, subject to lender approval. Your existing mortgage and any other loans secured against the property must be included within that limit.

Home equity may be used for purposes such as renovations, debt consolidation, investing in another property or other major financial needs. Accessing equity increases the debt secured against your home, so the new payment, interest cost and repayment period should be considered carefully.

Renewal can be a convenient time to review this because you may be able to restructure the mortgage without first breaking an existing term.

It depends on what you are changing. Under current federal mortgage rules, OSFI does not expect federally regulated lenders to apply the prescribed minimum qualifying rate to an uninsured mortgage that is being transferred from one federally regulated lender to another as a straight switch.

For this exemption to apply, the mortgage amount and remaining contractual amortization cannot be increased. The new lender must still review the application and decide whether you meet its underwriting requirements.

If you increase the mortgage balance to take out equity or otherwise refinance the mortgage, different qualification requirements can apply and you may need to qualify using the applicable mortgage stress test.

This distinction can matter at renewal. If your goal is simply to obtain a better mortgage with another lender, a straight switch is different from refinancing to borrow additional money.