Renewals
When the mortgage is about to mature, most lenders will mail out their renewal agreements around 30 days before the mortgage matures. Often, this causes a lot of grief for many people, especially if rates start to climb just before the mortgage comes due.
When your mortgage is due for renewal, it's a great opportunity to make sure that you've got the right mortgage for your present needs. Since the mortgage is fully open at this time, this is the perfect opportunity to pay down your mortgage. Whatever you can afford, even a small amount, will have a significant impact in terms of interest you will save over the life of the mortgage. It is also a great opportunity at this time to consider a more frequent payment method, such as bi-weekly or weekly, if you are not already doing it. And of course, choosing the new term is important.
Early Renewal
Whether or not you should early-renew your mortgage depends on several factors. If the current rates are lower than the rate you have, compare the prepayment charge against the savings by having the lower rate, and this will point the way. Or, if you believe that interest rates will be higher at your existing renewal date, you can renew early to protect yourself from higher rates. One thing to remember if you decide to early renew, is the prepayment charge will have to be paid up front. If there is room, you can add it to your mortgage, but you will have to go through a lawyer to redo the mortgage, and this cost will have to be taken into consideration when deciding which way to go. Some financial institutions will blend both rates for the new term.
