Leading up to a mortgage renewal, experts say, is also a good time to get your household debt in order dealing with high interest rate headaches like credit card debt.
Is your mortgage coming due in 2025? Here’s how you can prepare for renewal shock
Experts say it’s best to get an early jump on researching lender alternatives using rate comparison websites and even a mortgage broker who can leverage your renewal offer to land you a better deal.
Leading up to a mortgage renewal, experts say, is also a good time to get your household debt in order dealing with high interest rate headaches like credit card debt.
When interest rates were near rock-bottom levels in 2021, the average rate for a fixed mortgage for terms between three and five years was 2.05 per cent, according to . In 2023, the same term rate more than doubled to 5.41 per cent.
Even after a string of interest rate cuts by the Bank of Canada, Canadian homeowners should brace themselves for a higher renewal rate. As of Dec. 5., rate comparison site finds five-year fixed mortgage rates — the most popular type of mortgage in Canada — range from .
ARTICLE CONTINUES BELOW
Ian Calvert, vice-president and principal at HighView Financial Group in Toronto, says it’s never too early to start exploring your options. Selecting a new term involves deciding on the interest type and how long the new interest rate will be in effect.
In general, Calvert recommends giving yourself one to three months to shop around for the best rates. A mortgage broker or using mortgage comparison sites like ǰ can help in your search.
Dylan Wilson, a certified financial planner with Halifax-based Verecan Capital Management recommends using an independent mortgage broker who has access to multiple lenders and can leverage your existing offer to get a lower rate.
“Certain lenders are more aggressive when it comes to having attractive rates in terms than others at certain times,” says Wilson. “It all depends on how the balance sheet for that specific lender looks at that moment in time.”
But do your due diligence before working with a mortgage broker, making sure to ask questions about their commission structure and incentives.
“Certain lenders offer incentives, such as credits toward trips to sun destinations, gift cards or bonus commissions,” says Wilson, “depending on volume or what time of year the deals are placed.”
ARTICLE CONTINUES BELOW
ARTICLE CONTINUES BELOW
If you decide to work with a new lender, you will have to go through the application process for a new mortgage, including requalification.
The lead-up to a mortgage renewal is also a good time to see where you can hack away at your household debt jungle.
If you’re not sure where to start, Calvert says look to eliminate high-interest debt first, such as credit cards and private loans. “Completing a cash flow plan for the optimal mortgage payment range is also recommended,” says Calvert. “Ideally, your mortgage payments should be at a level that still allows you to save for retirement and have an emergency fund.”
“If you know your mortgage payment is going to rise by $500 a month, see if you can save that $500 a month today and smooth out the impact over time,” says Wilson, adding that making adjustments to your discretionary spending can be challenging.
“Putting in the work when the stakes aren’t as high can be beneficial in the long run.”
SK
Srivindhya Kolluru is a Toronto-based freelance journalist who
writes about business and finance.
To join the conversation set a first and last name in your user profile.
Sign in or register for free to join the Conversation