The new mortgage rules and interest rate hikes have made things a little more difficult for everyone this year—including homeowners that are due for a renewal. To prepare, you may want to start your mortgage renewal process as early as possible—between 90 and 120 days before your renewal date—to lock in the best rate. While you’re doing so, you will also want to keep the following in mind:
- Mortgage rates are higher.
Chances are, if you signed your mortgage five years ago—the preferred term by most Canadian mortgage holders—you’ll be in for a bit of sticker shock. You should know, however, that if you have mortgage default insurance (through CMHC or another provider), or if your mortgage is worth less than 65% of the value of your home, you could be eligible for a preferred rate.
- You’ll have to qualify on a higher rate.
Regardless of your mortgage size, you’ll have to prove that you can afford the Bank of Canada’s five-year benchmark rate—even if the rate offered by your lender is much lower. Today, that benchmark rate is sitting at 5.14%.
- If you don’t qualify, it’s not the end of the world.
If you can’t afford your existing mortgage at 5.14%, you can still renew, you just have to do so with your existing lender. If you do qualify, however, it would be ideal to use the 120 days or so before your renewal date to shop around—or, better yet, employ the services of a mortgage broker to do the legwork for you—to find a more competitive rate from another lender.
If you’d like to learn more about how the mortgage rules could impact your current situation—or if you have any questions about how the renewal process works—please don’t hesitate to reach out.