Real Estate

Renewing a mortgage: what are the steps?

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  • Apr 22nd, 2021 12:58 pm
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[OP]
Newbie
Mar 7, 2010
48 posts
26 upvotes
Toronto

Renewing a mortgage: what are the steps?

I'm moving towards the last 6 months of my 5-year fixed term mortgage with a big 5 bank. When is a good time to negotiate about it? Should I use a mortgage broker or should I simply go back with the same bank?
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Feb 2, 2014
9072 posts
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Toronto
misaki1111 wrote: I'm moving towards the last 6 months of my 5-year fixed term mortgage with a big 5 bank. When is a good time to negotiate about it? Should I use a mortgage broker or should I simply go back with the same bank?
You can only get an approval locked-in for 120 days, so start shopping around in about 2 months.

You can't get a rate held this early.
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Deal Addict
Jun 26, 2019
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In a few months, maybe 3-4 months before your actually renewal date, they are going to most likely send you an early renewal offer.

Based on timing, I assume this offer will be at a lower rate than your current based on you locking in 5 years ago and they will probably offer you to change right away, essentially saving you the rate difference for 3 or 4 months. You can call the branch for a better offer, but you will usually have to do a lot of legwork to improve it, and show somewhere else will beat it.

Alternatively, as @CdnRealEstateGuy said, you need to wait a few months before you can start shopping around and lock in rates.
Member
Apr 15, 2009
248 posts
254 upvotes
toronto
SubjectivelyObjective wrote: In a few months, maybe 3-4 months before your actually renewal date, they are going to most likely send you an early renewal offer.

Based on timing, I assume this offer will be at a lower rate than your current based on you locking in 5 years ago and they will probably offer you to change right away, essentially saving you the rate difference for 3 or 4 months. You can call the branch for a better offer, but you will usually have to do a lot of legwork to improve it, and show somewhere else will beat it.

Alternatively, as @CdnRealEstateGuy said, you need to wait a few months before you can start shopping around and lock in rates.
Call your current and call 2 other big banks. They will all ask for same papers. Get papers ready and get their offers. That’ll take you a month. Pitch them against one another. They’re very busy currently and slow. When they don’t respond in a week or two, tell them, oh well I didn’t hear from you I went looking and got this other offer. They will improve. Then pitch that against the others. That will eat time away. Eventually you will settle on or or even two commitments ( I had two fully ready to sign)
Then pick better of the two.
It’s amazing how much lower they can go to what they advertise.
[OP]
Newbie
Mar 7, 2010
48 posts
26 upvotes
Toronto
thank you for your help!
Last edited by misaki1111 on Apr 17th, 2021 1:40 pm, edited 1 time in total.
[OP]
Newbie
Mar 7, 2010
48 posts
26 upvotes
Toronto
SubjectivelyObjective wrote: In a few months, maybe 3-4 months before your actually renewal date, they are going to most likely send you an early renewal offer.

Based on timing, I assume this offer will be at a lower rate than your current based on you locking in 5 years ago and they will probably offer you to change right away, essentially saving you the rate difference for 3 or 4 months. You can call the branch for a better offer, but you will usually have to do a lot of legwork to improve it, and show somewhere else will beat it.

Alternatively, as @CdnRealEstateGuy said, you need to wait a few months before you can start shopping around and lock in rates.

thank you very much! hopefully their offer will be good.
Member
Feb 15, 2018
366 posts
436 upvotes
Edmonton
Looks like you are talking about two different issues.
Renewing a mortgage is very straight forward. It is just a matter of you and your current lender agreeing on a rate and signing off on it.
When you go to a mortgage broker or other financial institution, it is no longer a renewal but essentialy refinancing. You would need to redo a whole new mortgage application from scratch. More complicated process.
[OP]
Newbie
Mar 7, 2010
48 posts
26 upvotes
Toronto
canuckstorm wrote: Looks like you are talking about two different issues.
Renewing a mortgage is very straight forward. It is just a matter of you and your current lender agreeing on a rate and signing off on it.
When you go to a mortgage broker or other financial institution, it is no longer a renewal but essentialy refinancing. You would need to redo a whole new mortgage application from scratch. More complicated process.
Thank you for clarifying it for me. Would it be wise to reach out to a mortgage broker or other financial institution to do this refinancing?
Deal Guru
Sep 2, 2008
11893 posts
1714 upvotes
I reached out to a broker and had a good experience. They guided me through the process of finding a new lender that has what I wanted then letting me know what info and documents they needed from me (it was a lot more than I expected like job letter etc...didnt expect to need all that again).

Did it all online through email, never needed a phone call and got replies timely even late at night. The only thing I needed to do in person was some signatures but they sent a company to my home to do it.

Pm me if you want a referral.
Deal Addict
Jul 11, 2010
1189 posts
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Toronto
If you compare renewal rates offered with your current lender and other lenders, you might find that you are saving a significant amount of money by switching to a new lender at the end of your term. If your current mortgage is a standard charge mortgage and is currently insured, you can access the low rates that are offered to buyers who take a high ratio mortgage. As long as you keep the terms the same such as same mortgage amount and do not increase the amortization it is a switch. The new lender will pay for the appraisal and legal fees. You would be responsible for the discharge fee but most lenders will allow you to cap it into the transferred mortgage. If you add new money to your current mortgage, then this is considered a refinance. Now you would be responsible for the legal and appraisal fees. To switch to a new lender will require a new full application. However if you are able to save thousands of dollars over the term of the mortgage, a couple of hours to arrange this would be well worth it. You will need to submit a job letter for each on title, along with proof of home and fire insurance and proof that your property taxes are paid up and other documents if asked for by the new lender. Compared to the documentation required for a purchase or a refinance, it really isn't that bad in terms of paperwork.
Doug Boswell
intelliMortgage Inc. Brokerage #12326
FSRA #MO09002332
Member
Feb 15, 2018
366 posts
436 upvotes
Edmonton
misaki1111 wrote: Thank you for clarifying it for me. Would it be wise to reach out to a mortgage broker or other financial institution to do this refinancing?
I personally always use a broker as they can connect you with monoline lenders that will not even deal directly with the public. I have found mono lenders to have better rates and conditions.
Member
Feb 3, 2012
316 posts
166 upvotes
T.O.
canuckstorm wrote: I personally always use a broker as they can connect you with monoline lenders that will not even deal directly with the public. I have found mono lenders to have better rates and conditions.
This has been my experience as well.

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