Author: Newman L.

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Mortgage Renewal/Switch

Advantages Of Early Mortgage Renewal in Canada

Mortgage Renewal

Today, many people take advantage of various mortgages to acquire their dream houses, even when they do not have enough funds. A mortgage is simply a form of loan received by a person from a lender, often a bank, to purchase a house or property. These loans are paid back over an agreed period, either with a fixed or flexible interest rate. Repayment is either spread out monthly, weekly, or some months time. Mortgage services have made property purchases easy for many Canadians today.

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But there are some important details to note in a mortgage. One of those is mortgage renewal. Mortgage renewal is one of the many aspects of mortgages. Some others include mortgage refinancing, equity take-out, and many others. But for mortgage renewal, the main contention is about its benefits and disadvantages. Many people think that renewing your mortgage isn’t as beneficial as professionals portray it to be, because it simply extends your debt to the lender. While some others are ignorant of the benefits of mortgage renewal and thus do not pursue this option available to them.

Therefore, to demystify the notion of mortgage renewal, this article will highlight some advantages of renewing your mortgage early. 

What is Mortgage Renewal?

As the name indicates, mortgage renewal involves the extension or restoration of a mortgage. Mortgage renewal is the process of extending the terms of your loan after the expiration of the current loan with you unable to completely pay off the loan. This means that renewal happens under two conditions: when you are unable to pay off your mortgage at the agreed time and when the current term of your mortgage is up. This happens, especially when you do not have funds to repay your loan, and the best option available to you is to seek a mortgage renewal.

Therefore, mortgage renewal is the act of restoring the mortgage on your house to give you a longer period to pay off your loan. This renewal allows you to renegotiate the mortgage terms, such as the interest rate, payment frequency, and length of the term. In other cases, a mortgage renewal allows you to maintain the same details of your mortgage and simply extend the length of the term.

The Mortgage Renewal Process

The mortgage renewal process is fairly simple. Often, before the end of your mortgage term, if you are unable to pay off your loan in full, your lender sends you a notice that you can renew your mortgage. So, you can either renew your loan for a new term with your current lender, where you can maintain the same loan conditions and rate, or renegotiate new terms and conditions.

You could also search for a new lender to offer you a lower interest rate and a shorter term. This offers you new opportunities with a new lender. But more importantly, it offers more time.

The Pros of Early Mortgage Renewal

In mortgage renewal, the period you renew your mortgage is just as vital as renewing the mortgage itself. There are periods of mortgage renewal, which indicate when a person renews his/her loan. These periods include early and late mortgage renewal.

Early mortgage renewals refer to the process of renewing or extending your loan before your current mortgage term ends. It is done in anticipation of the end of a mortgage term and with the knowledge of ones’ inability to pay off in full before it ends. At the same time, late mortgage renewal refers to when an individual renews his/her loan after the current mortgage term has ended. Each type has its own benefits and disadvantages. But for this discussion, we would focus on early mortgage renewal.

Although the pros of early mortgage renewal vary based on the situation; amount owed, time left, and interest rate. But here are some benefits of renewing your mortgage early.

Renegotiation of Terms

One major advantage of early mortgage renewal is that you have adequate time to carry out your research. Adequate market research allows you to go to the negotiating table full armed with the possibility of having a better outcome.

So, early mortgage renewal allows you to renegotiate your loan terms. Due to proper research, you would know the current rate in the market. You would know if the current market rate is lower or higher than your existing loan interest rate. And if the market rate is low, you can decide to renegotiate a lower rate with your lender while renewing your mortgage even before your current term ends.

Changing Lenders

Early mortgage renewal also allows you to change lenders effectively. Often when you want to renew your mortgage, it is advisable to scout for other lenders with good interest rates. Rates that are lower than that which your current lender offers you. Sometimes, you might not end up using these other lenders, but it gives you a negotiating power at the table with your current lenders if they want to retain you as a client.

Proper research when you plan for early mortgage renewal offers you the opportunity to meet other lenders, scout, and make the best choice for your renewed mortgage. This choice can significantly affect your ability to pay off these loans during the loan term and the rates you get.

Lock-In Rates

With early renewal, you have the opportunity to lock in rates. This means that there might be a sentiment or rumour in the market that interest rates are about to increase. Renewing your mortgage when rates are high means that you will be paying more than your current mortgage. In this instance, you can lock in rates at a lower price by renewing early.

You lock in your renewed mortgage at a lower rate than the future high rate.

Conclusion

Although some might argue that early mortgage renewal has its disadvantages, we can see from the points stated above that it greatly benefits the individual. Renewing a mortgage is beneficial to individuals who cannot pay off their loan in full. But early renewal accords you more benefits as you have enough time to research and make the right choice for your mortgage.

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Hope now you know why early mortgage renewal is good in Canada. Visit our website Best Mortgage Online for any help related to Mortgage, Home Finance in Canada

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Home Equity Takeout

Pros and Cons of Equity Takeout

Home Equity Takeout- Best Mortgage Online

There are numerous debates about the pros and cons of equity takeout. Some are in support of pro-equity takeout, while others are against it. But it would be wrong to pick a side without a proper understanding of the concept of equity takeout and full comprehension of its pros and cons.

Therefore, this article will highlight some of the features of equity takeout while also defining the concept of equity takeout. Then, we will discuss the advantages and disadvantages of equity takeout. Why does borrowing money from your property to finance other activities affect you in a wrong way or a good way? On these and more, we would decide. So, read on and find the answers.

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What is Equity Takeout?

It means taking equity out of your house to get funds to finance other expenses. It is the process by which people get loans from equity on their houses or properties to attend to urgent expenses.

These expenses could be unpaid school fees, medical emergencies, debt repayment, unforeseen expenses, or even funds for a vacation or family holiday. This means that different people take out equity in their homes for different reasons, but they all focus on the need for money to fund a certain expense. This means that the application of equity takeout varies based on the individual’s needs.

Also, there are variations in equity takeout. Some have a fixed rate and a fixed sum borrowed, while others have a variable rate and a flexible sum borrowed. For those agreements where the rate is fixed, the interest you pay back on the loan is fixed, and the amount you can get from the equity takeout is fixed, agreed upon at the contract’s start.

For variable rates, the interest rates vary and can be adjusted. While the sum borrowed from equity is not fixed, it is flexible to the needs of the individual and the agreement with the lender. Both variations have their benefits and disadvantages. One helps with organization and a structured form of operation, while the other is unstructured and prone to misuse.

Our focus is not on the pros and cons of both variations but on equity takeout as a whole.

The Pros of Equity Takeout

Some benefits of equity takeout include;

Fixed Interest Rate

For your equity takeout, you enjoy a fixed interest rate. The repayment of a home equity loan is often paid in installments over a period of five to thirty years. The market rate would rise and fall at various intervals throughout this period. But your repayment is not affected because you enjoy a fixed rate on your equity takeout. So, no matter the rise in interest rates you pay the same as agreed at the beginning.

Having a fixed interest rate is vital in helping you plan your repayment method. You know the exact amount that needs to be paid with interest and can adequately budget your finances to pay it off at the required time fully.

Multiple Usage

Another benefit of equity takeout is that it has multiple use cases, which simply means that you can use it for anything that you want. You can take out equity to repay a debt, but after getting the loan, you may then receive an unexpected sum of money that could help you clear the debt.

You can use the money gotten through this means to repay debts, open a business, for investment, for a vacation, for fees, anything you want. It is not restricted in any way.

Repayment Plan

Home equity loans also give you enough time to repay the loan. The repayment term could last as long as twenty years at a fixed rate. This means that you can effectively plan your finances to fully pay off when due.

Relatively Low Rates

Apart from getting a fixed rate from a home equity loan, you also get lower rates than unsecured loans. What this means is that since the loan is coming off of the equity on your property, the interest rate is often lower than other means by which you may get a loan, such as personal loans, and bank loans.

The Cons of Equity Takeout

There are some cons to using equity takeout, which dissuade some people from using this means of borrowing. It is vital that you duly consider all these drawbacks before engaging in the process of equity takeout. These drawbacks vary, but some include;

Possibility of Losing Your Home

Bear in mind that you are placing your house up as collateral to collect a loan. This means that failure to repay the loan could lead to foreclosure of your house by the lender. So, know that there is a risk of losing your home before you apply for equity takeout.

Higher Interest Rate

Since interest rates for equity takeout are fixed, institutions often make the agreed rate higher than what you might get from a home equity line of credit. The best interest rates are offered to clients with great credits. So, you need a high credit score to get low rates.

Closing Costs

In an instance, where you want to end the contract and close the loan before the end of the term, you would need to pay a closing cost. These closing fees account for about 2-5% of the loan amount. This means that you cannot simply close the loan without a penalty or closing cost despite your financial state.

Substantial Equity

Remember, that equity takeout is you simply borrowing by exchanging equity on your house for money. To do this, it is often required that you have equity in your house of about 15-20%.

Conclusion

Equity takeout isn’t a decision that one should rush into. You need to carefully evaluate its pros and cons, and analyze your borrowing options. This is because if you have not fully paid off your first mortgage, equity takeout would simply become a second mortgage for you and you would have to handle paying off two mortgages with the same disposable income.

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Hope after reading this article your doubts get clear about home equity. Browse our website Best Mortgage Online for more information on Home Refinance, Debt Consolidation, Mortgage and more.

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Mortgage Renewal/Switch

Mortgage Renewal Process in Canada

Mortgage Renewal Canada

When buying a house, you usually sign a mortgage with a 15 to 35-year amortization. But throughout that time, the lender can break your mortgage into terms that last anywhere from 6 to 120 months. The mortgage is broken up into 24- to 60-month terms in most cases.

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So, when you renew your mortgage, it usually means that you are signing a new agreement with the lender for a term equal to all or part of what is left on your previous agreement. The renewal cost will depend on current lending rates at the time.

The Mortgage Renewal Strategy in Canada

There are two things that any serious homeowner should do before the end of their mortgage term:

  1. shop around for a new lender or
  2. have a renewal strategy.

While you might think that renewing your mortgage automatically means going with the same lender, there are some great reasons to take advantage of other lending options open to you.

Mortgage Renewal in Canada: Step By Step

Remember, if you don’t shop around for the best mortgage renewal rates available to you, you’re leaving money on the table. So here’s what to do:

Step 1. Start Preparing on Time

Think about how much you can realistically afford and decide on a budget. Remember that your lender will most likely require you to qualify for the new mortgage at a higher interest rate than what you paid on your last term.

Gather all of your financial documents, including the latest payslip, bank account statements, a notice of assessment from the Canada Revenue Agency, etc. Make sure to provide your financial institution with a copy of this information if they request it. You may also be asked to provide proof of employment or other income sources.

Contact a lender and tell them you’d like to get pre-approved for a mortgage renewal. They’ll give you a rate and a pre-approval code that you can pass on to the seller of your house. The seller may then write into the offer that they will accept your renewal application, provided you meet all other conditions for buying a property (price, financing).

Step 2. Choose to Renew or Break Your Mortgage Term Early

When you get a mortgage renewal letter from your bank, it will show your current interest rate next to the new rate you will have if you renew. It’s very tempting to say “OK” and avoid all the confusing fine print. But by doing so, you’re only agreeing to sign another mortgage term with your current lender – which means locking yourself into paying that new rate for the next 20-25 years! That is unless you choose to break your mortgage or renew it early.

The pre-authorized cancellation form is the only way to terminate your mortgage without penalty. It lets your lender know that you’re ready to end your current agreement. The benefit of using this method is that you will be able to shop around for the best new rates and terms from other lenders when you do break it.

Step 3. Know You Renewal Options

Before you renew your mortgage, you need to know what kind of mortgage product would suit you best. Knowing the options might help you become mortgage-free sooner than you thought. Here are some of the essential options and terms you should know:

  • Fixed-Rate Mortgage: Your interest rate stays the same during the loan term. You will need to refinance at the end of the term unless you want to renew your fixed-rate mortgage.
  • Variable-Rate Mortgage: A floating-rate mortgage is also tied to prime lending rates and can change anytime. If interest rates go down, your payments may decline accordingly.
  • Principal and Interest Payment Mortgages: This kind of mortgage has you paying off your principal (the actual loan amount) and financing charges each month for the term.
  • Interest Only Mortgage: You only pay off just finance charges by making monthly payments that don’t cover any part of your principal balance or total interest due during the term.
  • Line-of-Credit Mortgages: A particular type of variable rate mortgage attached to a separate line of credit. It’s great for those who need the flexibility to borrow from their own home during the mortgage term without being charged extra fees or penalties. The interest you pay on this loan changes along with prime lending rates.

Step 5. Remember: It’s OK to Walk Away From Your Mortgage Term

If you’re not happy with any offers from your current lender or another one, don’t just sign anything right away. Instead, consider whether or not renewing is even in your best interests at all. Think carefully about how long you plan on staying in the home before you sign on again – and whether or not finding a better rate than what is being offered might make more financial sense in the long run.

If you do decide not to renew your mortgage, make sure to get out of it properly by either filling out a pre-authorized cancellation form or breaking your term early with no penalty before its time is up. If you don’t, then you could find yourself stuck paying an interest rate that’s higher than what other lenders are offering elsewhere. Also, remember that while mortgages may come with terms designed to protect lenders from customers defaulting on their loans, they’re also meant to help homeowners achieve their financial goals.

The Bottom Line

Your mortgage renewal date is an important day – and it’s your chance to switch your existing loan to a new plan that better suits you. In most cases, the first thing you need to do before even thinking about renewing is to make sure that you’re as satisfied as possible with the product and service being offered by your current lender.

If no other bank can offer a better deal, then don’t be afraid of sticking with what you have if it means keeping monthly payments manageable for both yourself and your family. But whatever you do, make sure not to ignore this crucial step in the mortgage process! It can help ensure that getting rid of your home won’t become more costly than it needs to be later on down the road – especially since most Canadians don’t know when they’ll finally be done with their mortgage.

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Hope now you know the process of Mortgage Renewal in Canada. For more information on Mortgage, Refinance, Rates, Home equity visit our website Best Mortgage Online

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New Purchase Mortgage

Mortgage Pre-application and Mortgage Pre-qualification

Pre-Approval mortgage

Are you looking to buy a home? What do you know about mortgage applications? Have you been wondering about the differences between mortgage pre-approval and mortgage pre-qualification?

A mortgage is a loan used to secure a home, and In Canada, most homeowners obtain a mortgage to get their home.

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Once you understand mortgage basics, you will see and understand the differences between mortgage pre-approval and mortgage pre-qualification.

Mortgage Application

To choose a mortgage, you must familiarize yourself with the various types of mortgages and choose the best one for you. When choosing a mortgage, you’ll need to consider several factors. The most important is having an accurate idea of your monthly costs.

This will entail repaying the “principal” loan and making interest payments. In addition, if you can’t make a 20% down payment on a home, you will be required to pay for private mortgage insurance (PMI)

Before you can apply for any mortgage, you need to assess if you can afford it or not. It would help if you got a clear idea of the whole thing before going into it. Securing a home through a mortgage is easy if you understand how it works.

Suppose you want to apply for a mortgage, you must consider the down-payment closing costs, such as lawyer fees and real estate commissions. Also, it would be best if you considered maintenance costs, and monthly home-related expenses such as mortgage payments, home insurance, property taxes, utilities, etc.

 It would help if you also took note of your current debts, such as car loans or student loans, and finally, you must check your spending habits too. Once you look into these things, you will easily apply for a mortgage.

When applying for a mortgage in Canada, certain documents will be required before you get the mortgage. They are a

  • Letter of employment
  • current tax returns
  • an assessment notice
  • bank statements
  • paystubs,
  • assets and liabilities statement
  • purchase agreement and Sale
  • Photo identification.

You must note that the mortgage application will include primary and personal information. For instance, name, address, phone number, social security number, employer, income, etc.

The application will also require your assets, such as mutual funds and RRSPs. It will also include liabilities, such as credit cards and credit lines, and loans. Also included is the purpose of the loan, the mortgage loan amount required, the type of mortgage loan you want, the mortgage term, amortization, and interest.

 In addition, it requires a description of the property you want to buy or already own.

Mortgage Application Process

There are two basic steps to mortgage application: pre-approval and pre-qualification.

Mortgage Pre-approval

A pre-approval document states the maximum amount of money that your mortgage lender is willing to lend you. When looking for a home, a pre-approval document is extremely useful. It indicates that you are a serious buyer prepared to act quickly on a property when you find one you like.

 A mortgage pre-approval prepares you for a stress-free home-buying experience. You can approach mortgage lenders for pre-approval once you’ve decided on the type of mortgage you want.

Pre-approvals don’t take long. They entail obtaining a three-bureau credit report called a tri-merge, and this shows your credit score and history as reported by third-party, reputable institutions. A lender can examine your credit report to see your payment history and your past and present credit lines.

Your lender will determine the loan amount for which you are eligible. Pre-approval saves you a lot of time because it will allow you to focus solely on houses in your price range. Because the seller has solid evidence, you’re qualified for a loan to purchase the home, having a pre-approval document gives your offer a lot of leverage.

Pre-approval is as comparable to validating your credit worthiness as you can get without a sales agreement. You will supply certain information to the lender, and the lender will verify the information you supply. They will also run a credit check. If you’re pre-approved, you’ll get a pre-approval letter, which is an offer (but not a commitment) to lend you a certain sum for 90 days.

Mortgage Pre-qualification

Pre-qualification is now a crucial step when you want to buy a home. Once you pre-qualify for a home loan, you’re getting an estimate of how much you might be able to acquire based on the financial information you supply as well as a credit check.

Pre-qualification is the process by which lenders determine whether you meet the basic financial criteria for a home loan. Pre-qualification is also a chance to learn about various mortgage options and collaborate with your lender to find the best fit for your goals and priorities.

To get pre-qualified, you provide a lender with some basic information about your credit, debt, income, and assets, and the lender determines how much you may be able to borrow. The keyword here is “tell.” Because the information used for pre-qualification is self-reported, the lender does not typically verify it or look at your credit report.

Mortgage lenders will consider your credit profile, annual income, expected loan term and interest rate, monthly debt payments, and potential home-related expenses to determine how much mortgage you’ll be able to pre-qualify for.

Mortgage Pre-qualification is a process that is quick and fast. It is a non-binding, informal evaluation, and as such, you can be pre-qualified in a day or two, sometimes even less. Pre-qualification may occur in person, over the phone, or online, depending on the lender.

Differences Between Mortgage Pre-approval and Mortgage Pre-qualification

There is a distinction to be made between pre-qualification and pre-approval. Pre-qualification entails providing your lender with verbal or written estimates of your income and assets, who may or may not check your credit.

 Mortgage pre-approval means that the lender has confirmed your financial information and issued a pre-approval letter to show sellers and agents that you are authorized, subject only to identifying the house’s value and condition.

Also, pre-approval makes you ready to make an offer confidently and gain a competitive advantage. However, you can start house-hunting knowing how much you might be able to borrow under pre-qualification. Pre-qualification answer questions for this process, plus a credit check while providing proof of financial details, plus a credit check.

Conclusion

People use the two terms as if they are the same. But there are significant distinctions that every home buyer should be aware of, and we have discussed them in this post. Once you know the differences, you know what to opt for.

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Mortgage Refinance

Mortgage Payment Calculator

Mortgage Payment Calculator

When it comes to mortgages, there are a lot of factors that go into determining the final sum that you pay each month. It can be advantageous to have a clear idea of how much your mortgage will cost before applying for one. A mortgage payment calculator is an ideal way to calculate the cost of your mortgage before committing to one.

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With a mortgage calculator, you can determine your monthly payment for your loan and compare prices with different scenarios depending on down payments, fixed or variable rates, and more.

Why Should You Use a Mortgage Calculator?

The primary purpose of any mortgage calculator is to give people who are interested in taking out a mortgage an idea of the cost. It is not advisable to commit to paying a mortgage without fully understanding what it would cost you. Mortgage calculators are innovative tools that allow you to put down all the variables that make up your final mortgage price and adjust them accordingly, so you can find the best mortgage plan for you.

With a mortgage calculator, you can figure out ways to reduce your mortgage payment by changing some factors. A mortgage calculator is an excellent tool for homeowners that want to know how a mortgage will fit into their budget. Using this tool, you will have a clear idea of just how much you will have to pay each month for your mortgage.

Factors that Affect Mortgage Prices

A few factors affect the final amount that a homeowner pays each month for their mortgage. Adjusting these factors can cause significant changes to the amount of money paid monthly. The home loan calculator takes all of these into account when helping you calculate your mortgage price.

Home amount

This is the asking price of the home you desire to purchase and the amount you require from a bank or lender. Mortgage lenders usually have criteria that determine just how much a person can borrow for their mortgage. This is determined by the homeowner’s total income and expenses.

Down payment

The down payment is an upfront payment made on the home purchase. It is usually a percentage of the total home amount. The amount of down payment a customer can pay determines how much their monthly payment will be. A down payment can range in size, depending on the financial ability of the homeowner, and the mortgage plans provided by the mortgage lender. The higher the down payment, the lower the monthly payments and vice versa.

Loan price

The loan price is the total amount of money a homeowner receives from the mortgage lender. This is calculated as the home amount minus the down payment that has been made and any costs covered by insurance that have been taken away. It is from this price that an interest rate is calculated.

Amortization period

The amortization is the total time it will take to pay off your loan fully. A longer amortization period ultimately results in smaller monthly payments, while a shorter amortization period will lead to higher monthly payments. Longer amortization periods also end up with higher overall interest paid as the payment period is longer. The mortgage payment calculator will help determine the best amortization period for you.

Interest rate

best-interest-rates-available-in-Canada

The interest rate is a percentage of the loan price that the homeowner pays each month. The interest rate is the cost of borrowing and represents the profit of the mortgage lender. Most lenders offer either fixed interest rates or variable interest rates to their customers. Fixed interest rates are unchangeable rates that remain the same throughout the payment period. Variable interest rates are adjustable rates that only stay fixed for certain periods. Variable rates are adjusted due to factors such as market conditions.

Variable interest rates are generally believed to result in lower monthly payments than fixed rates. With a mortgage calculator, you can determine what types of rates, down payment amounts, and amortization periods suit you best.

How to Use a Mortgage Payment Calculator

Different mortgage calculators may have different interfaces for how they work. However, no matter what calculator you use, there will be constants.

Firstly, you will have to put in your home price. This works whether you are buying a home for the first time or you already own a home and you’re looking to refinance your mortgage.

The next step is to put in the amount you are willing to pay as a down payment. For mortgage refinances, the down payment field may ask for the amount of equity you own instead. Down payment can be entered as a percentage of the home amount or as a dollar amount.

Once you’ve put in your down payment amount, the calculator may ask for your preferred amortization period next. You can put this in yourself, or the calculator may suggest an amount of time for you. A typical mortgage amortization period may last about 30 years, but you are free to put a different amount, like 20 or 15, into the home loan calculator.

Finally, the calculator will ask for your interest rate. Here, you can put in the interest rate that you feel you will be comfortable paying or the rate you know your lender will request.

With all of this information put in, the calculator will give you new values for interest rate and loan price. These are the best rates that are available to you based on the information you put in. you are free to adjust your down payment amount of amortization period if you want to see alternate results from the calculator.

Conclusion

Mortgage calculators are easy to use and incredibly beneficial for anyone interested in buying a home. With a mortgage payment calculator, you can enter into your mortgage plan with a clear idea of how much your mortgage will cost. Mortgage calculators are free and offer reliable results. Instead of jumping into a mortgage blind, make use of a home loan calculator to get a good idea of the cost.

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Home Equity Takeout

What is a Home Equity Loan Calculator?

Home equity Calculator

A home equity loan calculator is a tool used to help borrowers figure out how much money they can borrow against the equity in their home.

The calculator considers the current value of the home, the outstanding mortgage balance, and other factors such as closing costs and interest rates.

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That information can help borrowers determine whether or not they should take out a home equity loan and how much they can afford to borrow.

How Does a Home Equity Loan Work?

A home equity loan is a specific loan type that uses the equity in a home as collateral. It lets homeowners borrow against the value of their home, which can be used for various purposes such as home repairs, medical expenses, or college tuition. Home equity loans typically have a lower interest rate than other loans, and the terms can be flexible.

How to Calculate Your Home Equity Loan?

The amount a borrower can borrow with a home equity loan is based on the equity in the home. Now, you can calculate equity by subtracting the outstanding mortgage balance from the home’s current value. For example, if a home is worth $200,000 and the mortgage balance is $100,000, the homeowner has $100,000 in equity.

Other factors that are considered when calculating a home equity loan include:

  • The interest rate on the loan
  • The closing costs
  • The term of the loan

How Home Equity Loans and HELOCs Differ?

There are two distinctive types of home equity loans: a closed-end loan and a HELOC.

A closed-end home equity loan is a one-time loan paid back over a set period. The repayment schedule, interest rate, and terms are all fixed when the loan is taken out.

A HELOC – short for Home Equity Line of Credit – is a revolving line of credit you can use for any purpose you want. The person making the loan only pays interest on the amount they borrow, and the interest rate can vary. The term of a HELOC can be up to 30 years.

How to Get a Home Equity Loan?

To get a home equity loan, the homeowner must have equity in their home. The amount of equity needed varies from lender to lender, but most require 20%. The homeowner will also need to provide income statements, W-2s, and credit scores.

Home equity loans can be used for any purpose, but some lenders may have restrictions on what the money can be used for.

When is a Home Equity Loan the Best Option?

There are a few instances when a home equity loan might be the best option:

  • The homeowner needs money for a large purchase such as a car or home repairs
  • The interest rate on other types of loans is higher than the interest rate on a home equity loan
  • The homeowner needs a more extended repayment period than what is available on other loans
  • The homeowner wants to borrow a large amount of money

Are There Any Risks Associated With Home Equity Loans?

There are several risks associated with taking out a home equity loan. One risk is that if you cannot make your monthly payments, you could lose your home. Another risk is that the interest rate on a home equity loan may be higher than the interest rate on your current mortgage. Therefore, you should weigh the risks and benefits of taking out a home equity loan before you proceed.

When Is a Home Equity Loan Calculator Useful?

A home equity loan calculator can be helpful in several situations. For example, if you consider whether or not to take out a home equity loan, the calculator helps determine the amount of money you can borrow.

The calculator can also help you compare different lenders’ offers and find the best deal. Finally, the calculator can help you budget for your monthly payments.

If you are interested in using a home equity loan calculator, some online calculators are available for free. Try a few different calculators to find the best one for you.

How Do I Use a Home Equity Loan Calculator?

To use a home equity loan calculator, you will need to know the current home value, the outstanding mortgage balance, and the amount of money you want to borrow. You will also need to know the interest rate and terms of the loan. Enter this data into the calculator, and it will calculate the monthly payment and the total cost of the loan.

When Is the Correct Time to Use a Home Equity Loan Calculator?

A home equity loan calculator can be helpful for borrowers who are considering taking out a home equity loan. The calculator can help borrowers figure out how much they can afford to borrow and the monthly payments. However, keep in mind that figures calculated by the calculator are estimates and may not reflect the actual terms of the loan.

 Are Home Equity Loans a Good Idea?

Home equity loans are a good idea for homeowners who need money for a large purchase or home repairs. The interest rate on a home equity loan is usually lower than the interest rate on other loans, and the terms are usually longer.

Before taking out one, borrowers should be aware of the risks associated with home equity loans. In addition, it is crucial to weigh the pros and cons of a home equity loan before deciding.

A home equity loan calculator can help determine if a home equity loan is a suitable option for you. The calculator will help you figure out how much money you can borrow and what your monthly payments will be.

The calculator should not be used as the only source of information when deciding on a home equity loan. Always consult with a qualified mortgage professional before taking out a home equity loan.

The Bottom Line

The calculator can help borrowers determine if a home equity loan is the best option. It considers the interest rate, closing costs, and other factors that can impact the loan cost. Borrowers can use the calculator to compare different loans and find the best one for their needs.

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Mortgage Refinance

A Guide to Mortgage refinancing in Ottawa, Canada

Home Mortgage Refinance

There comes a time when, for certain reasons, you may have to refinance your mortgage in Ottawa. This simply means paying up your current loan before the term expires to change specific details of your loan. Or it could be to get a lower rate or change to a different lender in Ottawa. Whatever reason you may have for refinancing your mortgage, you must know that it comes with certain risks. Especially in the capital city, Ottawa, where there are many firms offering mortgage refinancing services, there are risks and penalty costs.

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Therefore, before you fully decide to take the path of mortgage refinancing, you should read this guide on mortgage refinancing in Ottawa, Canada. We will discuss what a mortgage refinance is, its purpose, its major reasons, and its costs, risk, and rates. Thus, you do not want to skip this.

What is a Mortgage Refinance?

In simple terms, mortgage refinance refers to acquiring a new loan on your house by ending your current loan before the expiration of its term. It works in a way where you pay off your current loan and replaces it with a new one. The new mortgage might have different details from the old one, such as term length, lower interest rates, higher mortgage balance, and much more. You could also pay off your current mortgage and get a new loan with a different lender for extra benefits. This is especially so in Ottawa, where some mortgage firms offer rewards and gifts.

What is the Purpose of Mortgage Refinancing?

Moving on, there are several purposes for mortgage refinancing. Some purposes are central to the essence of refinancing a loan. Refinancing mortgages occur because homeowners seek to make a change. This change could be in terms of the loan term, rates, and many others. But for these changes to occur, the current loan needs to be paid off and refinanced with a new one.

Therefore, some major reasons for refinancing mortgages in Ottawa include;

Borrow More Money

Mortgage Refinancing

One main aim of mortgage refinancing in Ottawa is to borrow more money by accessing the equity on one’s property. Assuming the balance of your current loan isn’t much and you need money for other investment opportunities or your children’s education. You can refinance your mortgages, which gives you access to up to 80% of the appraised value of your property. This means that you get more money from refinancing in Ottawa.

To Change Interest Rate

Mortgage refinancing is also aimed at reducing interest rates. This is because this type of loan has a lower rate than other types of loans. So, when homeowners notice that interest rates have dropped in Ottawa, they often opt for the option of refinancing their loans to get a lower interest rate.

To Change Term Length

Mortgage refinancing is also used to change loan terms. The new loan often has different details from the previous one. And one such detail that has changed is the term length of the loan, giving homeowners in Ottawa, Canada, a longer period to pay off their mortgage.

To Change Lender

Homeowners also choose to refinance their mortgages to change lenders. Perhaps there is a lender in the capital city who offers certain benefits that you desire. You can change lenders through mortgage refinancing.

But note that there are penalties or prepayment fees attached to ending your current mortgage before the term ends, which are legally binding.

What are the Reasons for Mortgage Refinancing?

There are many reasons for refinancing a mortgage, some of which are part of the purposes of mortgage refinancing. A big city like Ottawa comprises diverse individuals, each acquiring mortgages for different reasons and equally acquiring mortgage refinancing for various reasons. Some of these include;

· It could be to borrow more money to offset a financial burden such as school fees, pay off debts, or engage in new investment opportunities in the capital city.

· To get lower interest rates that reduce your mortgage costs in the long term. There might be rumors about a potential hike in rates. So, you might want to take advantage of the current low-interest rates by paying off your current loan and getting a new one at a lower rate before the hike.

· It could be to change the mortgage type. Mortgage refinancing allows you to change your type of loan from a variable rate to a fixed rate, or from a higher monthly payment plan to a lower monthly payment plan, and so on.

· If you plan to renovate your house or want to purchase a new property. Then mortgage refinancing could provide the needed funds for these and other expenses that may arise.

· You might want to consolidate your debts by acquiring a mortgage refinance that helps you pay off all your pending debts. Then, you can plan effectively to have a better, more stable financial state and credit score.

· You may want to revisit the prepayment penalty on your loan and, thus, get a mortgage refinancing to change this detail.

How to Refinance Your Mortgage?

In the capital city of Canada, there are several ways that you can refinance your mortgage.

Break Your Current Loan

You can break your current loan to refinance your mortgage. This is done by paying off your existing mortgage. Then, acquire a new loan with any lender of your choice at a lower interest rate. But ending your loan before the expiration of the term attracts prepayment penalties.

Blend or Extend Your Current Loan

You can also extend your current loan with your current lender at a blended rate. But only if your current lender allows blending loans, which simply means combining your existing loan with a new one. It allows you to blend your current rate with a new market rate. But in comparison to other options, this is often more expensive.

Get a Home Equity Line of Credit

Individuals can also access mortgage refinancing by adding a home equity line of credit, which means they get access to their home’s equity at their discretion. This is possible in Ottawa.

Rates for Mortgage Refinancing

The rate at which firms refinance mortgages varies based on their offer. Some firms offer fixed rates for refinancing over a fixed period, while others offer lower variable rates. So, you should do proper research on the rates of mortgage services to refinance before you jump into it. Or you check out the rate of your current lender to refinance.

Best Mortgage Online allows you to compare rates of various firms across Ottawa. It also places the shopper’s interest at the centre of its activities, by ensuring that homeowners get the get best deal based on their terms, saving cost and time.

Best Mortgage Online offers various rates from banks, brokers, and even private lenders. You can get a;

· 2.64% broker rate on a 5-year fixed loan.

· 2.94% banks best rate on a 5-year fixed loan.

· 8.49% lenders rate on a 1-year renewable loan.

These rates are some of the best available in the capital city.

Conclusion

In summary, mortgage refinancing has lots of benefits for homeowners, especially in the capital city, Ottawa, where there are more opportunities in terms of mortgage services. But know that it comes with risks. The prepayment penalty for variable mortgage rates in Ottawa is often three months of interest, while that for fixed loan rates is over three months of interest.

So, you need to evaluate your ability to cover this cost of refinancing before you choose it. Also, know your reasons as the main aim is to have a better financial life overall. So, you do not want to refinance your mortgage for a cause that will only depreciate and leave you in debt.

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New Purchase Mortgage

Understanding Home-ownership in Canada: From Selecting to Paying off Your Mortgage

Home Ownership experience

Back in 2016, nearly two-thirds of Canadian families – 63% of them, to be exact – owned their homes. However, only 43% of these people had paid off their mortgage. Between 1999 and 2016, mortgage debt represented 66% of the overall increase in debt for Canadian citizens.

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If your dream is to own a home, you should know that purchasing a house can significantly boost your credit score. However, many people are interested in the homeowner’s lifestyle, but they are also worried about getting into debt. To help with this dilemma, here are some essential factors you should be aware of regarding home ownership in Canada.

Choosing Between Different Types of Mortgages

Even if you want to buy a house, it is crucial to be aware that you are not required to do so. The only way to do so is mandatory is when you apply for a mortgage loan. There are several different options available for mortgages in Canada – fixed-rate mortgages, variable-rate mortgages, and variable-rate mortgages with a fixed payment. Because of the higher interest rates associated with variable-rate mortgages, obtaining a fixed-rate mortgage loan for your first home is probably best.

Mortgage Payment Frequency

People who ask themselves, “Do I have to pay my mortgage in Canada?” should know this is a common question. Fortunately, there are several options available for scheduling your monthly payments. Monthly payment schedules include the following:

  • Weekly payments (1/52 of the total loan amount)
  • Biweekly payment schedule (1/26 of the total loan amount – half of a monthly payment)
  • Semi-monthly payments (twice per month – 1/24 of the total loan amount)
  • Monthly payments (1/12 of the total loan amount for twelve months)

Regardless of which schedule you choose, it is essential to know that your mortgage loan probably won’t be paid off by the time you retire. On average, Canadians who live in major cities will still have a mortgage balance of $110,000 after 25 years of making payments on their homes.

Amortization and You

The word “amortization” might sound intimidating at first, but it is nothing to worry about. Amortization means that part of your mortgage payment schedule goes towards paying down the principal amount of your home loan. The rest of your payments go towards interest charges. If you pay off your house by making lump-sum payments or by letting your mortgage loan terms expire, you will have to pay the penalty.

You may be wondering what would happen if you did not make a mortgage payment for a while. Unfortunately, this can lead to the loss of your home and other serious consequences that could ruin your financial stability. It would help if you tried to avoid this by setting up an automatic withdrawal schedule for paying your mortgage in Canada.

Obtaining a Mortgage in Canada

The only way you can obtain a mortgage loan in Canada is by applying for one with a financial institution or bank. Of course, this means that you will need to submit extensive paperwork and go through several different stages. Make sure that you provide the bank with all of your monthly income and banking information so they can determine whether or not you are eligible for a loan.

When it comes to receiving a mortgage in Canada, there is one thing you should know: the larger your down payment is, the better off you will be. Your credit score and history play a significant role when it comes to determining whether or not you are eligible for a loan. If you have several different types of credit accounts that are all maxed out, then the bank will probably reject your application.

Your credit history is even more critical if you apply for a mortgage with little money down. That is because the more significant the down payment you make, the lower your actual home loan amount will be. In addition, you should know that banks and other lending institutions typically require a minimum down payment of 5% to 10%.

Figuring Out Your Down Payment

One of the main concerns about home-ownership in Canada is that you have to pay a down payment. Banks might require you to pay as much as 20% of the purchase price before giving you a mortgage loan. To buy a home worth $500, 000 your down payment needs to be at least $100 000. However, it is essential to know that you can buy a house with less than 20% down.

Suppose you have a family member willing to invest in your house by becoming a part of the ownership structure called “equity sharing.” In that case, it might be possible to buy a home even without paying any money upfront. It is also possible to finance more than 80% of the purchase price by taking out a second mortgage loan.

How to Pay Off Your Mortgage Faster

One of the main benefits of home ownership is that you can access all sorts of financial assistance programs. For example, suppose you want to renovate your house and higher-quality materials than your budget allows. In that case, it might be possible for you to finance the purchase by taking out a home renovation loan.

In addition, you might be able to take advantage of the tax relief offered by the Canada Revenue Agency. For example, if you make a down payment of more than 20%, you might qualify for a refund on your taxes over several years.

Another way to pay off your mortgage faster is to invest in a tax-free savings account. Regarding other ways to pay off your mortgage faster, it is essential to know that the longer your amortization period, the more you will have to pay in interest.

In Conclusion

If you want to buy a home without worrying about getting into debt or paying a down payment, it might be a good idea to get in touch with a mortgage specialist. It is also possible for you to improve your credit score to access different types of loans. In addition, there are several different financial assistance programs available when it comes to home-ownership in Canada.

If you have any query related to Mortgage, home equity, home-ownership, home loan or refinance then visit our website home page or Call us directly at 1-855-567-4898 (toll free).

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New Purchase Mortgage

Mortgage Down Payment in Canada: Everything You Need to Know

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If you’re reading this, you’ve probably come across the news that prices of down payments in Canadian cities have skyrocketed over the past year. As CTV News reports, in 2021, housing affordability has worsened by the widest margin in nearly 30 years.

But despite all of this, many Canadians are still out there buying properties. Whether you’re buying your first home or owning multiple properties, you know that the buying process starts with saving for a down payment. 

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To help you start, here’s everything you need to know about down payments in Canada.

How Minimum Down Payment Works in Canada

When a down payment is mentioned, people usually think of the minimum amount you must pay as a deposit. However, the term mortgage down payment covers different deposits with varying credit conditions.

The Loan-to-Value Ratio (LTV) is how much of your home’s price is paid by the mortgage. Most mortgage lenders use this insurance to keep themselves safe even when they don’t have collateral.

The minimum mortgage down payment in Canada ranges from 0% to 20%. In addition, all high-ratio mortgages require mortgage default insurance, which protects against losses in case of borrower default, death, or disability.  

The amount you put down will affect the mortgage rate and mortgage payment. For example, if you put down a mortgage down payment of less than 20%, there will be mortgage insurance fees.

The mortgage insurance premium is payable to the mortgage insurer, the Canada Mortgage and Housing Corporation (CMHC), or Genworth Financial Canada Ltd. This amount is usually included in your monthly mortgage payment. Exclusions from mortgage insurance include:

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Different Types of Minimum Down Payments

Though mortgage down payment is usually used interchangeably with mortgage insurance, there are also different types of mortgage down payments.

Cash Committed Mortgages

If you need a mortgage loan but don’t have the minimum 20% mortgage down payment, your mortgage advisor can help you get a cash-committed mortgage loan. A cash-committed mortgage loan requires mortgage insurance because the loan amounts are greater than 80% of the property’s value.

A cash-committed mortgage loan requires mortgage insurance because the loan amounts are greater than 80% of the property’s value.

Lender Mortgage Insurance (LMI)

If you plan to borrow more than 80% of your home’s price and can’t meet mortgage down payment requirements, it will be an interest-only mortgage with mortgage default insurance. That means mortgage insurance premiums must be paid with interest charges until the mortgage is paid off, or mortgage down payment can be increased to 20% or more of the home’s value.

CMHC Mortgage Loan Insurance Premium (CMHC MIP)

If you need mortgage financing and cannot make a minimum 5% mortgage down payment, you can apply for mortgage loan insurance with the Canada Mortgage and Housing Corporation (CMHC. The CMHC mortgage loan insurance premium is payable to mortgage default insurance.

National Housing Act Mortgage Loan Insurance Premium (NHA MIP)

The National Housing Act mortgage loan insurance premium is payable to mortgage insurer Genworth Financial Canada Ltd., on mortgage loans with mortgage rates more than the mortgage down payment.

Mortgage Loan Insurance Premium (MIP)

The Canada Housing and Mortgage Corporation (CHMC), a mortgage insurer under the National Housing Act, operates as Canada Guarantee. This mortgage insurance premium is payable to mortgage insurer Genworth Financial Canada Ltd., on mortgage loans with mortgage rates more than the mortgage down payment.

How Much Mortgage Down Payment Do I Need?

You don’t need to pay a 20% mortgage down payment to get a mortgage loan, but you must avoid borrowing more than 80% of your home’s value. You can calculate this by taking your property value and subtracting the mortgage down payment.

Different mortgage lenders have different mortgage rates and insurance premiums for mortgage down payments. You can lower your monthly mortgage rate by making mortgage down payments of more than 5% of the home’s value, e.g., 10%, 15% or 20%.

Time You Need to Save Up for a Down Payment

You need to consider how much time you need to save up for a down payment. Luckily, the National Bank of Canada recently released a report outlining how much time people need to save money to make the first down payment. 

If you saved 10% of your pre-tax household income, it would take you slightly under six years – or 69 months – enough to save for a down payment on a typical Canadian home. As at this time last year, there had been 57 months of saving at the same rate.

Putting away 10% of your household’s pre-tax income may take decades in Vancouver, Victoria, and Toronto.

Average Down Payments by Province

Next, you need to realize that your down payment vastly varies from province to province. That can help you determine how much money you’ll need for a down payment on a house in your area based on the average price of homes in your area. 

Here are the average don payments in Canadian provinces, according to the latest Real Estate & Housing Market Forecast report:

  • British Columbia: The average down payment in British Columbia is $159,762.64, or 22.5% of the purchase price of a property.
  • Ontario: Ontario homebuyers, on average, make a larger down payment than residents of any other province (aside from British Columbia). 
  • Quebec: According to first-quarter data, Quebec residents made the smallest down payment on a home, with an average of less than 15%.
  • Alberta: The average down payment in Alberta was $62,929.45, making it the second-lowest in the test markets, behind only Quebec’s 15.15 percent.
  • Nova Scotia: The average down payment in Nova Scotia is 18.54 percent ($57,781.46), the lowest among the test markets at $363,330.

Closing Thoughts

The mortgage down payment is the cash a home buyer needs to pay as a deposit on a mortgage. Mortgage insurance reduces this for buyers who can’t complete a down payment. Depending on mortgage rates and insurance premiums, you can calculate mortgage down payments in Canada.

Let us at Best Mortgage Online help you find the best loan rates to assist you in your home purchasing process. Contact us via the button below.

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Mortgage Renewal/Switch

Will Your Mortgage Renew Automatically in Canada?

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Will Your Mortgage Renew Automatically in Canada?

In Canada, when a borrower takes out a mortgage loan to purchase a property, the loan is typically secured by a written agreement called a “Mortgage.” The borrower agrees to repay the mortgage using monthly payments consisting of interest and principal. The period used for repayment of principal is referred to as the term.

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In most cases, borrowers will sign a mortgage for a term of 5 to 25 years. However, once the borrower has paid down the principal to 80% of the property’s original value, he may be able to renegotiate his loan with his lending institution to obtain lower monthly payments.

What Does Mortgage Renewal Mean?

Renewing a mortgage means that the borrower will take out another written agreement with the lending institution, paying off the original loan and signing up for a new term to pay down the principal. Each time this is done, borrowers may be charged fees to obtain their new mortgage.

When Does Mortgage Renewal Occur?

When you renew your mortgage depends on whether or not it has an automatic renewal clause or “option.” At least 30 days before the expiry of your current mortgage, you should receive notification from your lending institution regarding its renewal policy. Borrowers are typically informed if their mortgages will automatically renew subject to certain conditions. These conditions include:

  • The property value increases;
  • The creditworthiness of the borrower;
  • The property type; and,
  • Changes in market conditions.

Suppose your lender does not include an automatic renewal clause in its mortgage agreements. In that case, borrowers are required to make arrangements with their lending institution before the expiry date of their mortgages to obtain new loan terms. Failure to do so may result in a default on the original agreement.

Borrowers who fail to pay their outstanding debts will be subject to foreclosure proceedings by their lenders. They will also lose any accumulated equity in the property, which generally reverts to the lending institution.

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What Happens When Your Mortgage Expires?

If you have a fixed-rate term with no options or renewals attached, your mortgage will expire at maturity. That means that your lender cannot ask you to renew or extend the term of your agreement, and for this reason, a fixed-rate mortgage is a good choice if you think that you might want to move from the property in question before the end of the term.

When Does Your Mortgage Renew Automatically?

During the fixed-rate term of your mortgage, you may wonder what will happen to your rate and monthly payments if they aren’t changed when your agreement expires. That is a good question and one that your lender’s automatic renewal clause can answer.

When Does Your Mortgage Not Renew Automatically?

Most mortgages contain an automatic renewal clause with terms that range from six months to five years. The length of time will vary depending on the type of property involved, how much has been paid off on the existing loan, the borrower’s creditworthiness, and market conditions.

For example, borrowers with “substantial equity” in their homes may have a renewal term of 10 years, while those with no equity usually have to renew for five. With this being said, the bank will not provide a more extended renewal option than the borrower needs or wants.

Borrowers who want a definite expiry date can choose a five-year option and then renegotiate the terms of their loans at maturity. Those who prefer to pay off their mortgages earlier can opt for shorter terms, such as 18 months or two years.

What Happens During Your Mortgage Renewal?

Once your mortgage has been automatically renewed, you will be required to sign another agreement with your lending institution. This document will list all of the original loan details along with the new interest rate, repayment date, amortization period, and other information.

The bank will not automatically save you money on your new rates or terms. To receive the best possible renewal package from your lender, you must call the institution during this time to negotiate a more competitive interest rate and term.

Let’s say that your mortgage is renewed at a higher rate than that on the original agreement. Then, it may be possible for you to refinance with another financial institution within a short period following its expiration. 

That particular strategy may spare you some of the higher associated costs involved with breaking before maturity, as well as those incurred from being charged an early termination fee by your current lending institution.

How Can Your Mortgage Renew Automatically in Canada?

If you need a new mortgage, consider how it will renew automatically in Canada. Some lenders offer personalized renewal terms tailored to your specific requirements. These may include:

  • The ability to lock in interest rates;
  • Mortgage renewal guarantees; and,
  • Loans with flexible terms.   

Pros and Cons of Automatic Mortgage Renewal

There are advantages and disadvantages for borrowers who choose to have their mortgages automatically renewed. For example, suppose you are out of the country or plan on moving far away from your property before the end of your fixed-rate term. In that case, automatic renewal may be beneficial because it reduces one more element that could prevent you from renewing.

On the other hand, if you expect rates to fall over the next few years, it might make sense for you not to renew your mortgage but instead opt for a shorter term to take advantage of lower interest rates. In this case, opting out of automatic renewal will give your lender less bargaining power when terms with you at renewal time.

The Bottom Line On Automatic Mortgage Renewal

Keep in mind that there may be a cost involved with breaking your mortgage agreement before maturity, even if your lender does not renew it automatically. However, you can avoid this expense by calling your lender before the automatic renewal date and negotiating a better deal.

If you are looking to acquire home loans, more information on Mortgage in Canada, loan rates in states of Canada, etc. let Best Mortgage Online help you.

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