Real Estate

Renewing Mortgage soon, best practices?

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  • Oct 22nd, 2017 12:56 pm
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[OP]
Jr. Member
Jan 18, 2015
153 posts
27 upvotes
Cornwall, ON

Renewing Mortgage soon, best practices?

Okay so I've only renewed once before, and I took whatever the fixed "deal"-rate was at the time (happy just to get something decent)...but now my credit score has broken 700 on both bureaus and I'm in a better position. Last time I just accepted what I could get. This time I've asked them to look into the renewal as soon as possible, because as I understand, the rates are going up now (correct me if I'm wrong). I've had about 3 credit checks on EQ and 2 showing on TU this year. How much of an impact would 1 more credit check between now and January (when I can earlier renew without penalty) be? Should I just sit on my hands and wait? They didn't seem to want to offer me anything right now - which is weird, because I would eat penalty fees making them MORE money, and they said it would be basically whatever the standard rates are... my credit score is like 120 points above what it was last time I renewed! I'm pretty nervous about switching from a big bank to some noone's-heard-of place, and the fact they are basically just down the road is convenient for the prepayments (no car) which they also let me do without penalty. Experience and guidance would be much appreciated. Thanks.
20 replies
Sr. Member
Jan 15, 2017
524 posts
314 upvotes
When exactly is your mortgage up for renewal? From your comment, it doesn't seem to be Jan - that is when you can renew early without penalty. Depending upon your actual renewal date, you may not be able to renew now. Looking to lock in your mortgage rate now for a new term could mean refinancing your current mortgage.

If you are happy with your current lender why switch? It's great to get a lower interest rate, just make sure that you balance it with other features that you like - experience with your bank, convenient location and ease of prepayments.

The easiest thing to do is to wait until you hear from your current lender. Compare the rate offered with some of the rates that are available at that time. If you find a lower rate, ask your current lender to match it. They will either say yes or no - nothing ventured, nothing gained. If you still don't like the offer, then you can look at switching your mortgage. Best to find out what is involved in switching your mortgage though. For some, it is easy to switch, but for others, it will cost you money in legal fees.

Just make sure that you understand how any new mortgage lender operates and determine how important having a location within walking distance and having generous prepayment options is to you.
[OP]
Jr. Member
Jan 18, 2015
153 posts
27 upvotes
Cornwall, ON
skeet50 wrote:
Oct 13th, 2017 8:04 am
When exactly is your mortgage up for renewal? From your comment, it doesn't seem to be Jan - that is when you can renew early without penalty. Depending upon your actual renewal date, you may not be able to renew now. Looking to lock in your mortgage rate now for a new term could mean refinancing your current mortgage.
It's up for "renewal" middle of next year. (April? May? something like that)
skeet50 wrote:
Oct 13th, 2017 8:04 am
If you are happy with your current lender why switch? It's great to get a lower interest rate, just make sure that you balance it with other features that you like - experience with your bank, convenient location and ease of prepayments.
Well I know that it has great features and convenience, but if they don't offer me a reasonably competitive rate, I will have to. 0.25% difference is one thing - but 2+% is another.

Any idea if they will bother to check my credit? (I actually want them too this time, since it's the highest it's been since I got the mortgage)
Deal Addict
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Mar 23, 2008
4450 posts
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Edmonton
Once you get over the "not-sucky" threshold, your credit rating isn't going to have a huge impact on what rate you get. Even if you jacked it up to 750 or 800, it probably wouldn't be opening any doors that aren't open to you now. It just means you don't have to look at B-lenders or private lenders.

Personally, I'd just sit tight till January-ish, and then sit down with a mortgage broker. Then it's one hit to your credit.

Having said all that... You are over 700 now, but you were 120 points lower before? Depending on the actual value, I'm surprised you got any kind of mortgage back then. What was your rate? And why was it so low?

C
[OP]
Jr. Member
Jan 18, 2015
153 posts
27 upvotes
Cornwall, ON
CNeufeld wrote:
Oct 13th, 2017 10:39 am
Once you get over the "not-sucky" threshold, your credit rating isn't going to have a huge impact on what rate you get. Even if you jacked it up to 750 or 800, it probably wouldn't be opening any doors that aren't open to you now. It just means you don't have to look at B-lenders or private lenders.

Personally, I'd just sit tight till January-ish, and then sit down with a mortgage broker. Then it's one hit to your credit.

Having said all that... You are over 700 now, but you were 120 points lower before? Depending on the actual value, I'm surprised you got any kind of mortgage back then. What was your rate? And why was it so low?

C
At renewal it was at like ~600 because it landed shortly after bankruptcy. No, I actually got the mortgage when I was like ~686 back when 100% financing was a thing (95%+5% on close)... the BK happened like 4 years after that. Now I'm crossing the good to excellent mark with BK still there (almost off) with no derogatory accounts.
Deal Addict
Feb 2, 2014
3963 posts
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Toronto
CouponBaron wrote:
Oct 12th, 2017 11:44 pm
Okay so I've only renewed once before, and I took whatever the fixed "deal"-rate was at the time (happy just to get something decent)...but now my credit score has broken 700 on both bureaus and I'm in a better position. Last time I just accepted what I could get. This time I've asked them to look into the renewal as soon as possible, because as I understand, the rates are going up now (correct me if I'm wrong). I've had about 3 credit checks on EQ and 2 showing on TU this year. How much of an impact would 1 more credit check between now and January (when I can earlier renew without penalty) be? Should I just sit on my hands and wait? They didn't seem to want to offer me anything right now - which is weird, because I would eat penalty fees making them MORE money, and they said it would be basically whatever the standard rates are... my credit score is like 120 points above what it was last time I renewed! I'm pretty nervous about switching from a big bank to some noone's-heard-of place, and the fact they are basically just down the road is convenient for the prepayments (no car) which they also let me do without penalty. Experience and guidance would be much appreciated. Thanks.
Credit score is only half the picture OP. You can have a good credit score and late payments believe it or not...some lenders will still decline you. Point is, you need a good credit score and good history.

"Some noone's-heard-of place" are actually mortgage lenders will massive portfolios. In fact, big banks (along with pension co, life co...) are their investors.

It sounds like your mortgage is insured, which is a good thing for your renewal. You can get 2.74% 5-year fixed or 2.05% (Prime -115bps) today for your renewal....I would wait until you are within 120 days of your renewal and then start shopping around.

There's a massive mortgage thread here...best rates are pretty much poster there daily. Check it out in the new year when you are within 120 days.
Kevin Somnauth, CFA
Mortgage Agent and Real Estate Sales Representative
[OP]
Jr. Member
Jan 18, 2015
153 posts
27 upvotes
Cornwall, ON
CdnRealEstateGuy wrote:
Oct 13th, 2017 4:52 pm
Credit score is only half the picture OP. You can have a good credit score and late payments believe it or not...some lenders will still decline you. Point is, you need a good credit score and good history.

"Some noone's-heard-of place" are actually mortgage lenders will massive portfolios. In fact, big banks (along with pension co, life co...) are their investors.

It sounds like your mortgage is insured, which is a good thing for your renewal. You can get 2.74% 5-year fixed or 2.05% (Prime -115bps) today for your renewal....I would wait until you are within 120 days of your renewal and then start shopping around.

There's a massive mortgage thread here...best rates are pretty much poster there daily. Check it out in the new year when you are within 120 days.
First my credit score would be higher but there is an almost dropped off bankruptcy there (about 5 years?), nothing else negative showing, no late payments, all derogatory accounts expired off, never a late mortgage payment in my life, even before the BK. It's basically mint the last 5 years...but that BK is still reporting even if nothing is showing associated with it.

Yes my mortgage is insured with ... can't remember the name, but not CMHC, the other major one. When you say 120 days, is there a reason for that timeframe? Am I able to renew early with a new bank... or is it not renewing as much as transferring and I still get the early termination fees? If so why wait until then? I'm considering Fixed, because the only reason I wanted to renew right away is because it's only going to keep going up, and a fixed rate is more likely to save me money, as well as the stability.
Sr. Member
Jan 15, 2017
524 posts
314 upvotes
CouponBaron wrote:
Oct 14th, 2017 12:29 am
...
Yes my mortgage is insured with ... can't remember the name, but not CMHC, the other major one. When you say 120 days, is there a reason for that timeframe? Am I able to renew early with a new bank... or is it not renewing as much as transferring and I still get the early termination fees? If so why wait until then? I'm considering Fixed, because the only reason I wanted to renew right away is because it's only going to keep going up, and a fixed rate is more likely to save me money, as well as the stability.
No, you cannot renew you mortgage early with a new bank. Moving your mortgage from one lender to another is considered switching and can only be done at the end of your mortgage term. To do so earlier than the end is to refinance your mortgage and that will mean paying fees.

The 120 days to start shopping for a new lender is because mortgage lenders usually guarantee their rates for a maximum of 120 days. So starting earlier than that is pointless as the lender will not lock in a rate for more than 120 days.

Which bank holds your current mortgage? Some banks register collateral charges on their mortgages and it will cost you to even switch from these banks.
Deal Fanatic
Dec 27, 2013
6032 posts
2143 upvotes
Toronto
lol this is the game of rates bro. 6 months out? that's what your bank wants to do to retain you..

so you can either stay with them, or threaten to leave....

120 days from maturity date, you need to get an applcaiton with another bannk.

THE PROBLEM IS, in 3 months from now, rates for fixed might go up even more.... so it might best to lock in now.

good luck.
[OP]
Jr. Member
Jan 18, 2015
153 posts
27 upvotes
Cornwall, ON
skeet50 wrote:
Oct 14th, 2017 7:59 am
No, you cannot renew you mortgage early with a new bank. Moving your mortgage from one lender to another is considered switching and can only be done at the end of your mortgage term. To do so earlier than the end is to refinance your mortgage and that will mean paying fees.

The 120 days to start shopping for a new lender is because mortgage lenders usually guarantee their rates for a maximum of 120 days. So starting earlier than that is pointless as the lender will not lock in a rate for more than 120 days.

Which bank holds your current mortgage? Some banks register collateral charges on their mortgages and it will cost you to even switch from these banks.
So damned if I do and damned if I don't... if I wait I can switch but rates will be higher, and if I don't wait I can stay but they won't necessarily give me the lowest rate. It's Scotia. And the early renewal fees are relatively tiny... just 3 months of interest. I don't know if it's the same policy for moving to another bank though...
daivey wrote:
Oct 14th, 2017 10:59 am
THE PROBLEM IS, in 3 months from now, rates for fixed might go up even more.... so it might best to lock in now.

good luck.
Exactly why I want to lock in now. They won't do anything but the posted rate until 6 months before though...
Deal Fanatic
Dec 27, 2013
6032 posts
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Toronto
CouponBaron wrote:
Oct 14th, 2017 4:41 pm
So damned if I do and damned if I don't... if I wait I can switch but rates will be higher, and if I don't wait I can stay but they won't necessarily give me the lowest rate. It's Scotia. And the early renewal fees are relatively tiny... just 3 months of interest. I don't know if it's the same policy for moving to another bank though...



Exactly why I want to lock in now. They won't do anything but the posted rate until 6 months before though...
oh? that doesn't make sense.. which bank you with? usualyl when you early renew 6 motnsh before maturity they offer you the typical rates that most people get.
Jr. Member
Apr 24, 2013
151 posts
101 upvotes
Toronto
For me, I only had $200k left in my mortgage for renewal. I contact several brokers and all said that at this small amount, I should just stay with my current lender and renew with them. The rate was 'fair', but not the best though.

I am not sure if I made the right decision to stay with my current lender. Anyone can comment?
[OP]
Jr. Member
Jan 18, 2015
153 posts
27 upvotes
Cornwall, ON
daivey wrote:
Oct 14th, 2017 5:19 pm
oh? that doesn't make sense.. which bank you with? usualyl when you early renew 6 motnsh before maturity they offer you the typical rates that most people get.
As I said before it's Scotia, and I'm not 6 months out for another 2 months...

john5170 wrote:
Oct 14th, 2017 8:46 pm
For me, I only had $200k left in my mortgage for renewal. I contact several brokers and all said that at this small amount, I should just stay with my current lender and renew with them. The rate was 'fair', but not the best though.

I am not sure if I made the right decision to stay with my current lender. Anyone can comment?
That's interesting, because I outright couldn't afford a 200K mortgage. My mortgage is currently cheaper than rent, that's why I want to keep it that way for a while so I can get it drawn down faster. In fact it's small enough that some banks won't do business with me! Face With Tears Of Joy
Sr. Member
Jan 15, 2017
524 posts
314 upvotes
john5170 wrote:
Oct 14th, 2017 8:46 pm
For me, I only had $200k left in my mortgage for renewal. I contact several brokers and all said that at this small amount, I should just stay with my current lender and renew with them. The rate was 'fair', but not the best though.

I am not sure if I made the right decision to stay with my current lender. Anyone can comment?
You most likely contacted brokers who buy down rates and while they may not be completely open about it, only buy down rates on minimum mortgage balances. When a broker agrees to buy down your interest rate, he or she is essentially agreeing to pay the difference in interest between the higher rate and the lower rate with their commission. Rate buy downs significantly reduce the amount of money that the broker will earn on a mortgage, so these brokers will not generally work with complicated mortgages or have minimum funding amounts. These brokers are looking for quick and easy high mortgages.

You probably should have called a full service mortgage to see what your options were.
Sr. Member
Jan 15, 2017
524 posts
314 upvotes
CouponBaron wrote:
Oct 14th, 2017 4:41 pm
So damned if I do and damned if I don't... if I wait I can switch but rates will be higher, and if I don't wait I can stay but they won't necessarily give me the lowest rate. It's Scotia. And the early renewal fees are relatively tiny... just 3 months of interest. I don't know if it's the same policy for moving to another bank though...
Scotia will generally allow you to renew early, but usually 4 months, not 7-8 months.

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