The time has come, you need to renew your mortgage.
How do I renew my mortgage?
Several years back, you got a $350,000 mortgage with a 25 years amortization at the great rate of 2.24%. Your mortgage payments are $1,522 per month.
We are now in what the financial brainboxes call “an escalating rate environment" also known as a time of increased rates. When you open your renewal notice, you might encounter the same feeling you get when you look at your overpriced cell phone bill.
Looking at the renewal notice, you see that the remaining balance on your mortgage is now $294,662. The new, and now very competitive rate is 3.59% and your monthly payment is $1,672. This is $150 dollars MORE than what you were previously paying. You think “WHAT THE….?!”
This type of sticker shock is a new sensation to an entire generation of Canadians. Brokers are fond of talking about the fact that rates had not moved in 7 years, but we rarely talk about the fact that rates have been trending down for more than twenty years and chances are if you’ve had a mortgage for any time during that period, you are in for quite a shock.
“So how do I avoid sticker shock?” You might ask. Well..
The key to avoiding that sinking feeling is to increase your payments every year. You can find out how much to increase during your Annual Mortgage Review. By increasing your monthly payment by even 2% a month, you can potentially avoid the shock and pay off your mortgage even faster!
But wait, “Annual Mortgage Review?” Let us explain.
An annual mortgage review is done with either your mortgage provider’s representative or your own mortgage representative. It is a quick discussion to find out what your current balance is, how things are progressing and how you can implement early payment privileges, increased payment privileges and potential prepayment privileges.
If you have any questions, please contact HomeHow for more information.