“The future belongs to those who prepare for it today” - Malcom X

Unless you’ve been living under a rock, you may have heard that interest rates have changed significantly in the past few years. Meaning, if you’re one of the millions of Canadian whose mortgage is up for renewal in 2024, you may be rightfully concerned about what your options will be. The key is to start planning for your renewal now, so you are not taken by surprise. Here are three ways that will assist you in saving money on your mortgage renewal.

1. Payout high interest credit card debt – I’m amazed at the number of people I speak to who are concerned about the mortgage interest rate going from 2.99% to 4.99%, but don’t bat an eye at paying 22% on a credit card. You need to take a step back and look at your overall cashflow. Yes, your mortgage interest rate may increase on renewal, but if you can pay off high interest debt elsewhere, by refinancing your home, you may be further ahead financially.
2. Re-amortizing your mortgage – Let’s say you purchased your home four-and-a-half years ago, on a five-year term, and you put down 5% for a down payment; you would have most likely received a 25 year amortization. On renewal, your payment will be based on the remaining amortization, which is 20 years. BUT WAIT! You don’t HAVE to stay with that 20-year amortization. Some lenders will let you extend the amortization back out to 25 years. Others will even let you increase it to 30 years. Yes, this will increase your interest costs over the life of the mortgage. However, if you’re in a cashflow crunch right now, it may make your home more affordable today.
3. Taking a shorter term – By default, most Canadians take a five-year fixed rate mortgage. Did you know there are shorter terms available? The catch right now, is that those shorter terms are slightly higher than the five years. Why would anyone take a shorter term at a higher rate?
   1. If you plan to move in several years, this could save you thousands of dollars in penalties when you go to break your mortgage.
   2. You are betting that rates will drop in two to three years time, allowing you to capitalize on a lower rate, sooner, than in five years.

A good mortgage broker will ask you as many questions as possible when your mortgage is up for renewal.

1. How much longer do you anticipate staying in your current home for?
2. Do you have high-interest debt to pay off?
3. How much do we need to lower the payment by for your home to be affordable to you?

Just remember. The sooner you get started planning for your renewal, the more options you’ll have available. We would love to help find the customized option that’s right for you.