Mortgage Renewals

June 7, 2022 | Posted by: Simon Lyn

Why It’s Worth Using a Mortgage Broker When Renewing Your Mortgage

Connecting with a mortgage broker before renewing your mortgage will help you understand your options so you can make the most informed decision. Mortgage brokers are an excellent source of information on lenders, deals or promotions, and contract terms. Plus, if you’re well qualified, you can take advantage of certain benefits like not having to pay for their services out-of-pocket. 

Let’s take a more in-depth look at the mortgage renewal process and when’s the best time to connect with a broker.

What Does the Mortgage Renewal Process Look Like?

Let’s first start off by understanding what a mortgage renewal is. When your present-day payment term matures, i.e. you reach the end of your term, that’s the time when you have to sign on for a new term, i.e. you have to undergo a mortgage renewal. 

When your mortgage is up for renewal, what normally happens is your current lender emails or mails you your renewal statement, usually about three weeks before the end of your term. It includes details such as your current balance, the amount paid to date, payment frequency, and a renewal form for you to sign.

Many people will sign the renewal with their current lender, not knowing that there are other options available that might better suit their particular needs, or be more competitive. A lot can change in your life circumstances throughout the course of your mortgage term, so it’s important to take the time to consider what your needs are, and what they might be in five years' time. 

When renewing, it’s an opportunity for you to renegotiate the terms of your mortgage, such as the length of your next term, your interest rate, and/or your lender. While it’s common for borrowers to renew their mortgage with their current lender, it may sometimes be more practical to shop around.

The Challenges of Switching Lenders

When looking for a new mortgage broker, ‌you need to determine what you are looking for in a mortgage product. For example, are you looking for a product that has more flexibility when it comes to extra repayments? Are you considering switching to a variable or a fixed rate? Are you thinking about selling your place during the course of the next term? Do you want to borrow more money from your new lender? One size doesn’t fit all when it comes to mortgages. There are so many parameters that are unique to your own situation.

Once you determine what you want in a mortgage, you’re ready to find the right product. But there are a few challenges that you’ll encounter if you’re travelling the journey on your own.

First is that there is a sea of mortgage options available in the market, and some are more difficult to find or get access to than others. You also have to consider how much time you want to invest in searching for the best options. 

Another issue is that switching to another lender means undergoing another home-loan application and passing a stress test. That means having to gather a lot of documents from a lot of different places. You’ll need to provide your tax return, bank account information, employment letter, and a slew of other personal information, to prove that you can afford payments. 

If you make it over the stress-test hurdle, you then need to have funds available to pay the fees associated with switching lenders. Common fees include set-up fees, transfer costs, appraisal fees, and other administration charges. 

Navigating this maze can be tricky for anyone, let alone if it’s your first time considering making the leap to another lender. Partnering with a mortgage broker can make your experience much easier and less stressful. 

Why Connect With a Mortgage Broker for Your Renewal?

A mortgage broker can help you get the most competitive offer in the market. And not just in terms of interest rates. There are also many other benefits. But each mortgage product is slightly different, so getting help from a mortgage broker will help you narrow down your options based on your current finances, needs, and future goals. 

Additionally, an experienced mortgage broker will guide you through the stress test process, know which lenders cover the costs associated with switching, and help you negotiate better terms with lenders. The bottom line is that a mortgage broker can help you look for new lenders and get the best deal at that time, according to your needs. 

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