Let’s start with the basic definition. In short, it’s when your mortgage term ends and you have to renew your mortgage. After you get a mortgage with your chosen lender, there’s a contract in effect for a specific amount of time. This mortgage term can range from a few months to even longer. At the end of each mortgage term, you have to renew your mortgage. There can be several terms involved before you’re able to pay your balance in full.
What is a renewal statement?
At the end of a mortgage term, you have to provide a renewal statement. This is applicable if your contract is with a financial institution that is federally regulated. Your bank, in this case, has to give you a renewal statement. This statement should be provided to you at least 21 days before the end of the current mortgage term.
Note that this renewal statement should also include information such as the interest rate, the term, applicable fees or charges, the payment frequency, as well as either the remaining principal at the renewal date or the balance.
During this time, you should also go over the details of your mortgage. This can be especially useful if, for example, you want to make any updates to your payment frequency. Another reason for why you might want to review your mortgage is if you want to increase your payment amounts in order to pay off your mortgage faster.
What about my contract?
Review the contract in terms of the services that your mortgage lender currently offers you, as well as the likelihood of you making additional payments. This can also be a time to shop around for different mortgage lenders if you find that your current contract is no longer aligned with your goals. Shopping around doesn’t have to be near the end of your remortgage term, either. You can, for instance, begin looking for other lenders and brokers for better mortgage options a few months before the end of your mortgage term.
If you do end up choosing another lender, then make sure that the new lender approves your mortgage application. The criteria involved may be different from that of your previous lender, so ensure you are prepared for any associated costs. These costs can include, for instance, setup fees, administration fees, as well as an appraisal fee.