Has your mortgage term expired, or are you seeking to refinance your home for other reasons?
Here are four tips to make the process easier for you:
1.If your bank does not want to renew your mortgage, it must inform you of this fact at least 21 days before the term expires. You are not obliged to renew with the same bank. Your mortgage broker can help you shop for a new lender who offers better terms.
2. Your last mortgage may have been a package deal, where you received a discount for adding home, life, and disability insurance or a line of credit from the same lender or one of its affiliates to your mortgage. You may even have transferred your investment portfolio to make your mortgage payments cheaper. Now that you are shopping around for a new mortgage, remember these add-ons will not necessarily be renewed or transferred. You probably need to reapply. A package deal may not benefit you the most. You may be able to lessen your costs by choosing your mortgage, insurance and investments à la carte. If your lender pressurizes you into buying a financial package as a condition of accepting your mortgage application, it violates federal law. This pressure tactic is known as coercive tied selling. Report the illegal pressure to the Federal Consumer Agency of Canada at 1-866-461-FCAC (3222).
3. If your bank wants to renew your mortgage because you are a good customer, then it must send you a statement at least 21 days before the term expires. Check that all these items are on your statement:
- Total amount
- Term
- Amortization period
- Total payments
- Portion of payments that are interest
- Your annual interest rate as opposed to the real annual interest rate (APR), which includes administrative fees
- When interest charges begin
- Payment amount and due dates
- Optional services (e.g., insurance) you accepted and what the penalties will be if you cancel them
- Penalties if you pay off your mortgage before it matures
- Charges applied if you default
- A description of collateral you are using to secure the mortgage
- An explanation of how your payments apply first to the interest, and then the principal
- Broker fees
- Discharge fees
These items should be the same as they were on your original mortgage agreement,
unless your banker notified you in writing at least 30 days after the changes
took effect. Usually, the bank includes a mortgage renewal application form with the statement.
A good rule of thumb is to contact your mortgage
broker and start shopping for the best deal 4 months before your term
expires. Planning early helps you avoid
an automatic mortgage renewal that is too expensive.
