Are you preparing to renew your mortgage in the year 2022? If so you could be among hundreds of Canadians concerned about renewing their mortgage in this time of rapidly increasing interest rates. Money-solutions conducted the calculations to find out what Canadians could expect to occur to their mortgage payments when they renew on November 20, 2022. Now let’s dive into the topic and learn what we have found out.

Your mortgage payment is going to increase.

If you’re a homeowner looking to renew your mortgage in the month of November 2022, the most competitive fixed rate you’d been offered five years ago was 2.69 per cent. The current best 5-year fixed mortgage rate that you’ll be able to get for renewal is 4.89 per cent.

Based on the Money-solutions mortgage payment calculator it is possible to make 10% down on a home worth $500,000 in November of 2017 and a 5-year fixed-rate of 2.69 per cent which is amortized for the course of 25 years (total mortgage of $463,950) You would be required to pay an annual mortgage payment of $2,122 up to the date of your next renewal.

If you renewed your mortgage in November 2022 then the total mortgage of 394,170 and a fixed five-year rate of 4.89 per cent and the new regular mortgage monthly payment, which is $2,567

What does this mean for you?

Paul Soni, CEO and owner of Mortgage-solutions says, “Homeowners who have fixed rates that are up to renewal in the next month will notice their mortgage payments increase significantly,” As a matter of fact you will have to cut back other expenses.

It doesn’t mean you have to panic. “As as long as your income is comparable to the one it was just five years ago the family will be able to handle the larger amount. It is crucial to remember that those who took out a mortgage within the last five years were likely to have been able to pass the stress test at a rate of 4.99 per cent, which means that making the loan should be possible, however it may be difficult,” added Paul.

In a perfect scenario, the income of your family will have grown in the past five years, which makes it easier for you to pay for the greater price of your mortgage now.

What should you do if your mortgage is coming up for renewal?

Most of the time renewal process can be daunting. However, we have some of the best suggestions for you to ensure that you get the most competitive rate when renewing.

Get ready for the date of your renewal:

Straight out of shoulder, don’t rush to renew your mortgage. Your current lender will give you the early renewal invitation for 120 calendar days (or more) before the date of your renewal. The rate that your lender is offering you may not be the best rate on the market since they’re hoping that you’ll accept the offer to save time instead of looking around.

Moreover, it is not time to do whatever they say. But, looking around is precisely what you need to do. There is no obligation to renew your contract with your current lender. Within 120 days of your renewal date, a lot of lenders will offer a mortgage rate to your benefit, and you should look at what’s available on the market. If you’re looking to remain with your current lender, be sure you negotiate with them to provide you with the lowest rate that is offered through other banks. It is also essential to be willing to change lenders since this is often the best option to secure the most affordable mortgage rate. Some lenders will even pay the cost of switching.

Find an interest rate:

If you are looking for an affordable rate, the best option is to work with a loan broker. Instead of having to move between lenders, a mortgage broker will examine your credit report one time and provide the lenders that are willing to work with you with the most competitive rates they have to provide. A mortgage broker will inform you of the rate you might qualify for should you decide to change lenders.

Take note of your goals in terms of finances:

A lot can take place in a matter of half a decade So be aware of what your expectations and goals are for the next five years. For instance, if planning to have a baby or pay for a college education for your child or have a financial obligation coming up You’ll need to factor it into your budget. Be sure that the mortgage you choose is in line with your financial objectives. It might be beneficial to create your own list of features you’re seeking in a new mortgage, like flexibility and prepayment options. The mortgage advisor can assist to choose the most suitable product that meets your family’s needs.

Find a broker for mortgages:

A mortgage broker is basically an all-in-one shop for mortgages and has access to the most competitive rates offered by the Big Banks, credit unions and the top loan providers in Canada. A mortgage broker does the negotiations for you, and can hold rates for you for up to 120 days prior to the date of your renewal (so that you’re protected from rate hikes for the duration of the rate hold) and will guide you through the whole process of applying and switching which makes the process smooth and simple. It’s absolutely free to work with an experienced mortgage broker. Additionally, good mortgage brokerages pass their special discount, savings and other discounts to customers.

The process can take place quickly, usually at the first visit. If you’re not prepared to make a choice, for example, or if you’d like an opportunity to let your current lender be matched by the rate, you can ask your mortgage agent for a rate hold. Rate holds shield you from rate hikes for a period of up to 120 calendar days. If interest rates fall during this time do not fret you can negotiate your speed back to the lower rate also. Rate locks lock on the rate. You will not have to worry about that rates to go up prior to the time of renewal.

To sum up all the things.

Although your mortgage payments are likely to increase with renewal If your financial situation remains similar to when you first took out your mortgage, you will be able to afford the higher rate of your mortgage at renewal. In the fast-growing rate in 2022, comparing rates is crucial to ensure you receive the most affordable mortgage rate on renewal. To avoid the hassle of negotiating contact an expert mortgage broker who will give you professional personal advice and assistance with any paperwork you need to complete.

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