Getting a mortgage can be a long and difficult process, especially because of the tighter borrowing restrictions currently set into place by the Canadian lending authorities. But once you have your mortgage approved, you can relax until it is time to renew your mortgage.
If you are coming up to the renewal date of your mortgage and are considering renewing your mortgage with your current lender to help deal with the hassle, you are not the only one. The number of mortgage renewals with the same lender increased by almost 20% in the last year.
No, it shouldn’t. Once you reach renewal with your current lender, you will have two choices. You can either renew your mortgage with your same lender, or you can shop around for the best terms once it is time for your renewal. If you decide you want to go with a new lender, you need to go through the same applying for a mortgage.
Many people don’t go that route because of the strict mortgage approval criteria, which contributes to the increase in loan renewals with the same institution. Many homeowners are worried that they will not qualify for a mortgage with other lenders, so they mostly prefer to stick with their own.
In 2017, the Office of Superintendent of Financial Institutions (OSFI) introduced tighter mortgage restrictions and approval rules. One of the biggest changes they made was related to uninsured mortgages or homebuyers who have over 20% for a down payment. These borrowers would need to go under a stress test or qualify using a minimum qualifying rate, which has also led to many borrowers wanting to stay with the same lender.
Many lenders have also started sending out renewal letters to clients who are three to six months away from their renewal term, which helps make it more convenient to do their renewals. Sadly, many homeowners fail to realize that these lenders have revised their terms and probably also hiked their rates.
In some cases, switching to a new lender can actually help you save thousands of dollars, especially when rates are lower and the mortgage amount is higher. So, before you renew your mortgage terms with the same lender, try to review and shop around for other mortgage options. Speak with your mortgage broker and ask if they have any advice for you. They are able to scope the mortgage market to help find you alternative options and help you decide which one you should go with to help keep you financially stable and happy.
If you cannot afford to change to a new lender, then it’s best to stay with the same one but try and ask if they would revise their terms. But, if you are ready to go through the mortgage approval process over again, then you should feel free to try out a new lender.