9 Aug, 2023
family considering early mortgage renewal

Homeownership in Canada can be filled with complexities, particularly when it comes to understanding the intricacies of early mortgage renewal. In fact, as a homeowner in British Columbia (BC), one of the most important decisions you will face will be when and how to renew your mortgage. 

Understanding the process of early mortgage renewal, knowing when to employ this strategy, and being aware of tips for effective mortgage renewal, are all critical to your financial health. Moreover, becoming familiar with the mortgage renewal rates in BC can empower you to make an informed decision and secure the best possible terms.

In this blog, we will explore early mortgage renewal, provide practical mortgage renewal tips, and delve into understanding mortgage renewal rates in British Columbia. Our goal is to equip you with knowledge and tools to confidently navigate your mortgage renewal journey.

What Is an Early Mortgage Renewal?

An early mortgage renewal is when a homeowner chooses to renew their mortgage way before their current term expires. This process involves renegotiating the terms and conditions of your mortgage agreement, including the interest rate and payment schedule. It’s essentially a strategy to secure favourable conditions in anticipation of changing market circumstances.

In British Columbia, like in the rest of Canada, an early mortgage renewal can provide several benefits. If interest rates are predicted to rise, renewing your mortgage early could lock in a lower rate, saving you money over the term of your mortgage. This could be particularly beneficial in areas with high property.

However, an early mortgage renewal might also come with penalties, depending on your existing mortgage agreement. Therefore, it’s essential to weigh the potential savings against any costs associated with an early renewal. Consulting with a mortgage professional can provide valuable insight into whether an early renewal is a sound strategy for your specific circumstances.

When And Why You Should Consider an Early Mortgage Renewal

Why consider early mortgage renewal? The reasons are manifold and often hinge on changes in interest rates and personal circumstances. Let’s explore these factors in detail.

Capitalizing On Interest Rate Shifts

One of the main drivers behind an early mortgage renewal decision is a shift in interest rates. If rates drop, early renewal allows you to renegotiate your mortgage and take advantage of the new, lower rate, thereby reducing your mortgage payments and overall borrowing costs for the remainder of your mortgage term.

An interest rate reduction, typically resulting from a decrease in the policy interest rate set by the Bank of Canada, is a common motivator for early renewal. Furthermore, anticipating an upcoming rate increase can also make early renewal an appealing option. By renewing your mortgage early, you can secure a lower rate before the increase takes effect.

Navigating Personal Or Family Changes

Significant changes in your personal or family circumstances, such as a divorce or job transition, can also prompt an early mortgage renewal. These life-altering events often trigger a reevaluation of your budget and financial needs, making it a good time to reconsider the terms of your mortgage.

Moreover, if there are changes to the mortgage holders — say, adding or removing a person — an early renegotiation may be in order. Keep in mind that this would constitute a refinancing rather than an early renewal, as a credit report evaluation would be necessary.

Relocating

If you’re planning to sell your home and move, you might have the option to transfer your mortgage (in part or full) to a new property. This could be a strategic way to minimize the costs associated with breaking your mortgage terms before maturity.

In conclusion, early mortgage renewal can present a proactive strategy to navigate interest rate shifts and personal circumstances, ultimately empowering you to better manage your financial future. Always remember to weigh the potential benefits against any associated costs, and consult with a mortgage professional to ensure you make the most informed decision.

Are Mortgage Rates The Same Across British Columbia? 

The level of competition among lenders such as banks, brokers, and private lenders can vary across provinces and cities in BC, often leading to differences in mortgage rates. Mortgage rates are also influenced partly by housing demand, which is unique to each province. Consequently, these factors result in variations in mortgage rates across regions.

Additionally, you might find it useful to know that house prices tend to fall when interest rates rise because the subsequent rise in mortgage payments reduces demand from buyers. 

With that being said, according to Wowa, in 2023, the house price landscape across BC looks something like this:

  • British Columbia: Average home price increased by 4% year-over-year to $992k
  • Greater Vancouver: Average home price increased by 5% year-over-year to $1.27M
  • Vancouver West: Benchmark home price decreased by 1% year-over-year to $1.34M
  • Vancouver East: Benchmark home price decreased by 1% year-over-year to $1.22M
  • Burnaby: Benchmark home price decreased by 2% year-over-year to $1.11M
  • Richmond: Benchmark home price remained unchanged year-over-year at $1.19M
  • Coquitlam: Benchmark home price decreased by 2% year-over-year to $1.13M
  • Fraser Valley: Average home price increased by 7% year-over-year to $1.11M
  • Victoria: Average home price decreased by 6% year-over-year to $970k

To make a better sense of these prices for your area of interest and to learn more about how price fluctuations might affect your early mortgage renewal process, it’s always best to consult with a local mortgage broker.

Practical Tips For Early Mortgage Renewal

couple with consultant learning about early mortgage renewal

Navigating an early mortgage renewal successfully requires careful planning and an understanding of your financial landscape. Here are some essential tips:

  • Research and compare different lenders: Lenders offer different rates and terms, so it’s important to shop around to find the best fit for your needs. Don’t settle for the first offer you receive; compare different lenders to ensure you’re getting the best deal.
  • Assess your financial situation: Understanding your financial standing is crucial in determining what you can afford. Take into account your income, expenses, and existing financial obligations.
  • Consider timing and personal circumstances: Early mortgage renewal may not always be the best option. Consider the current market situation, your personal circumstances, and future financial forecasts before deciding.

The Advantage Of Working With Private Lenders In Early Mortgage Renewal

Navigating the early mortgage renewal landscape with private lenders can open up great opportunities. Private lenders can provide an advantageous alternative to traditional financial institutions and offer flexible and customizable solutions that fit your needs.

One of the main benefits of private lenders is their adaptable lending criteria. Unlike conventional banks with strict requirements, private lenders often consider a broader range of factors when evaluating your application. This flexibility can make them particularly attractive for homeowners with unique financial circumstances looking to renew their mortgage early.

In addition, private lenders are often more responsive than their traditional counterparts. They can typically make decisions faster essential when trying to lock in a favourable rate before market conditions change. This speed and efficiency can prove crucial in an early mortgage renewal scenario, giving homeowners the advantage of time and potentially saving them significant money.

While private lenders might sometimes offer higher interest rates, the trade-off comes with their ability to provide personalized services, flexible terms, and quicker approval processes. This flexibility can make all the difference in securing a mortgage renewal that aligns with your financial goals and needs.

Final Thoughts

Early mortgage renewal presents a unique opportunity to reassess your financial goals and secure favourable terms that align with your current situation. The process can bring significant benefits, including potential savings, financial stability, and peace of mind. However, like any financial decision, it requires careful consideration and thorough understanding.

Keep in mind the value of shopping around among different lenders, the importance of understanding your financial situation, and the significance of considering timing and personal circumstances. Remember, knowledge is power in the world of early mortgage renewal. Don’t forget the potential impact of professional advice, and consider consulting your mortgage broker for tailored guidance.

Are you considering renewing your mortgage early? Why navigate the complexities alone when you can have a seasoned professional by your side? Reach out to us to explore your options and craft a mortgage renewal strategy that suits your financial goals. Don’t leave your financial future to chance – make informed decisions with expert guidance today.

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