Preparing for Your Mortgage Renewal: What Windsor-Essex Homeowners Need to Know

As mortgage renewal dates approach, many homeowners in Windsor are facing a new set of financial considerations. With fluctuating interest rates and changing economic conditions, understanding how these factors might impact your mortgage renewal is crucial. This blog will provide a quick rundown of what Windsor, ON homeowners can expect and the options available.

 

Understanding Mortgage Renewal:

A mortgage renewal is a process where you renegotiate the terms of your mortgage loan at the end of your current term. This is a critical moment as it allows you to reassess your financial situation and potentially secure better terms, or determine if selling your home might be a better financial decision.

 

Factors Affecting Mortgage Renewals:

1. Interest Rate Changes: The most significant factor influencing your mortgage renewal will be the current interest rates. If rates have increased since you first secured your mortgage, your monthly payments could rise. Conversely, if rates have dropped, you might have the opportunity to lower your payments.
2. Economic Conditions: Economic stability or instability can affect interest rates and lending conditions. Keeping an eye on the broader economic environment will help you anticipate changes.
3. Credit Score: Your credit score can significantly impact the mortgage terms offered to you. Ensure your credit score is in good shape as you approach your renewal date.
4. Property Values: Changes in property values in Windsor can influence the equity you have in your home, which can impact refinancing options.

 

Why is 2024-25 Significant?

In Canada, 2024 is a big year for mortgage renewals. A staggering 80% of all mortgages outstanding as of March 2022 are coming up for renewal in 2024. This amounts to approximately $250 billion in mortgages. 2025 is expected to be an even bigger year with a whopping $350 billion in mortgage renewals expected. With low-interest rate mortgages taken before and during the pandemic coming due for renewal, the average monthly payment in the province will increase substantially. With a massive wave of mortgage renewals starting, homeowners need to understand the process and their options.

 

Options for Windsor Homeowners:

1. Renew with Your Current Lender: The simplest option is to renew your mortgage with your current lender. Often, lenders will send a renewal offer 3-4 months before your term ends. Review the offer carefully and negotiate better terms if possible.
2. Shop Around for Better Rates: Don’t feel obligated to stay with your current lender. Shopping around can help you find better interest rates and terms. Consider consulting with a mortgage broker to explore various options.
3. Refinance Your Mortgage: Refinancing involves breaking your current mortgage and starting a new one. This option might be beneficial if you can secure a significantly lower interest rate or need to access equity in your home.
4. Consider a Fixed or Variable Rate: Decide whether a fixed or variable rate mortgage suits your financial situation better. Fixed rates offer stability, while variable rates can be lower but come with more risk.
5. Evaluate Your Financial Goals: Take this opportunity to evaluate your long-term financial goals. Are you planning to stay in your home for the long term, or do you have plans to sell? Your goals should influence your mortgage renewal decisions.

 

Preparing for Your Mortgage Renewal:

1. Start Early: Don’t leave it to the last minute – begin preparing for your mortgage renewal several months in advance. This gives you time to research and compare options.
2. Review Your Current Mortgage Terms: Understand the terms of your existing mortgage, including the interest rate, remaining balance, and any prepayment penalties.
3. Assess Your Financial Situation: Take a close look at your current financial status. Calculate your monthly budget, savings, and any changes in your income or expenses.
4. Improve Your Credit Score: If your credit score has improved since you first secured your mortgage, you may qualify for better terms. Pay off outstanding debts and avoid making large purchases before your renewal.
5. Consult a Mortgage Broker: A mortgage broker can provide valuable insights and help you find the best renewal options tailored to your financial situation.
6. Consider Your Future Plans: Reflect on your future plans. If you plan to move soon, you might prefer a shorter-term mortgage. If you intend to stay in your home long-term, a longer-term fixed rate might be more suitable.
7. Understand the Market: Stay informed about current mortgage rates and market conditions. This knowledge will empower you to negotiate more effectively.

 

Tips for Getting the Best Deal:

1. Start Early: Don’t wait until the last minute. Research rates and speak with a broker at least 2-3 months before your renewal to ensure sufficient time and attention can be given to securing a better rate.
2. Credit Score Matters: A strong credit score can significantly improve your renewal offer or refinance options. But, building and maintaining credit should be an ongoing strategy, not a last-minute thought.
3. Negotiate Leverage: Use a quote from other lenders as leverage to negotiate a better rate with your current lender.
4. Consider a Fixed vs. Variable Rate: Fixed rates offer stability, while variable rates can fluctuate with the market. Choose the option that aligns with your risk tolerance and financial goals. This can be changed at the time of renewal, but not easily changed mid-term (yes, variable rates can often be converted into fixed rates at any time throughout the term, but pricing will be subject to posted rates at the time of converting, which is an unknown now and therefore hard to predict).

 

Resources for Windsor-Essex, ON Homeowners:

While many rate comparison websites can be useful when shopping for options, these sites can lag in updates, or sometimes convince clients they qualify for a product that they do not qualify for. A mortgage broker is best suited to help with renewal offers because they analyze and educate themselves on all banks’ products daily and weekly.

 

Conclusion:

By understanding the mortgage renewal process and your options, you can secure the best possible terms and save yourself money in the long run. Remember, with careful planning and some negotiation, you can navigate your mortgage renewal smoothly.

If you own real estate in Windsor-Essex and/or your mortgage is coming due for renewal, it’s a good idea to explore your options early, The Dan Gemus Real Estate Team Ltd., Brokerage is always here to help.  We offer free home market evaluations and we have an excellent referral network to ensure you  are connected with the best of the best in Windsor-Essex when it comes to lenders, lawyers and other professionals related to your real estate in Windsor and Essex County market.

Reach out to The Dan Gemus Real Estate Team 7 days/week: 519-566-5565 – full time and experienced REALTORS®, servicing all of Windsor and Essex County with their real estate needs.

Keep your finger on the pulse of the Windsor and Essex County real estate market by tuning in to The Dan Gemus Real Estate Show which airs on AM800 CKLW every Saturday and Sunday between 12:00-1:00pm for local Windsor-Essex real estate news and information.