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Early renewal of your mortgage

Your mortgage is due in a few months. Your current rate for a five-year term is 3.39%. Your financial institution offers you to renew early, four months before maturity, at the rate of 3.09% for a new five-year term.

Is it a good idea?

The answer is no.

Here's why: 

  • The rate currently offered could decrease again during the few months preceding the actual renewal date and your loan having been renewed early, you will not be able to benefit from this decrease.
  • The chances that the mortgage rate offered at the end of this new five-year term will be higher than the current rate of your loan are probable, which means that you will lose the benefit of a rate of 3.39%. for a few months.
  • You should also pay attention to the month of the year for your renewal. Banks are often more competitive and inclined to offer discounts during shopping time between January and August.

The solution: 

  • Contact your mortgage broker four months before the renewal date. The latter is able to reserve your rate for a period of 120 days, in this way your rate will not be able to increase and your broker will follow the market in order to make it decrease if necessary and in the event of an increase, you will be protected 😉

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