November 26, 2020

Basics Of The Mortgage Renewal Process

Mortgage Renewal Process

Mortgage Renewal Process

If you still owe some balance at the end of the term for your mortgage, you will need to do a renewal. Usually, the mortgage company will give you notice when it is time to renew. They will send you a renewal slip that you sign and send it back to them. However, you can do this earlier, especially if you want to avoid paying any late renewal fees. It is better to be a step ahead when renewing your mortgage.

Here are a few basic steps you should follow, when renewing your mortgage.

Start Your Renewal 120 Days Earlier

You should mark the date your mortgage will be due on your calendar, and then count back 120 days. This would give you a good four months to your mortgage expiration. It is usually the best time to start renewing your mortgage. When you start the process early, you won’t have to pay a prepayment penalty. The prepayment penalties are charged when you break your term early, and this happens if you fail to renew your mortgage before the due date.

Having enough time will allow you to review your prepayment options and other conditions on the mortgage. You will be in a better position to negotiate.

Take Note Of Your Financial Goals

Your current goals when you started your mortgage may have changed. It could be a job promotion, salary increase, or even retirement. Your finances may drop because of other financial responsibilities. When you make a list of these goals, it would help you determine which mortgage rate or term would be best for you.

Make A List Of Needs For Your Mortgage

This should come right after you have analyzed your financial goals. You can now search for the mortgage product that will fit into your goals. Determine if your monthly budget can accommodate an increase in your mortgage rate. If you can afford it, then you can go on to look at the terms and conditions that follow the mortgage product.

If you also have any additional money coming in that you are certain of like inheritances, or work bonuses, you can consider going for the lump sum prepayment options.

Another need you should consider is if you plan on borrowing more money from your lender. If this is the case, you need to look at the prepayment penalties involved or you may opt for collateral mortgages.

Renew Not Later Than 30 days

If you won’t be able to keep up with the four months early renewal target, you should make sure you do it 30 days before your mortgage is mature. The law makes it mandatory for lenders to send a renewal statement at least 21 days before the due date.

If they send you a renewal offer for their lowest posted rate, you can extend the offer for 30 days. In this case, you won’t be affected if there is any potential increase during the time. However, before you receive their renewal statement, you need to have done your research to find out the best rate in the mortgage market. It may not always be possible to get your lender to negotiate their offer but to be on a safe side, it would be best to visit your lender to discuss what other options they have to offer.


When you have all your options on your table, you can then decide to renew. If you find a mortgage rate elsewhere that is better, you can choose to change your mortgage company. However, if you want to get the best rates, your best option is to get a mortgage broker to help you negotiate for the best mortgage product.

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