Understanding Early Mortgage Renewals For Fort McMurray Oilsands Workers

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Most homeowners are aware that mortgage renewals must be approached in the exact same way as applying for a mortgage. Savvy homeowners do not only sign the renewal contract that their lender sends them in the mail. They understand the importance of researching their options and reviewing other lenders. They may also employ the services of a broker.


March 5, 2014 - (PressReleasePoint) -

Quite simply, many homeowners look at the moment as a chance to re-evaluate their finances and options rather than blindly renew a contract. But there's one consideration that has not received just as much ink when discussing mortgage strategies - the early renewal.
 
Early mortgage renewals are when chosen to renew mortgage earlier than specified end date of the mortgage contract. This option offers a major advantage to homeowners who hold a mortgage having an interest rate higher than what is currently offered. Quite simply, it provides a homeowner the ability to switch from a high interest rate mortgage to a lower one.
 
This can be a great strategy to lessen how much interest spends on a mortgage almost instantaneously. There are two techniques that early mortgage renewals can be accomplished. The foremost is by canceling a current contract, paying a penalty, and locking in at a lower rate for a brand new term. This is can be advantageous if at the start of the current contract and interest rates suddenly plummet. Or, it might be more advantageous to blend the 2 contracts together for a standard lower interest rate.
 
To illustrate, let's say that it hold a current mortgage contract that's 6% for a five-year term. It is already half way during the term with 2 ½ years left. It appears around and sees that interest rates are at 3%. If it had been paying the penalty and leave from the current contract, it would have paid 6% for 2 ½ years, then signed on for a brand new mortgage with a brand new extended term for 3%. Or, it could blend the 2 contracts. This would mean that the lender allowed it to alter the interest rate from 6 to 3% halfway through the term. It would still have 2 ½ years left on the term and could steer clear of the penalty. In the span of the five-year term, it would have paid an average (a' blend') of 4.5% interest.
 
Early mortgage renewals are also dependent on the lender. Most large banks allow their mortgage holders to complete an early on renewal within 120 days of the expiry of their term. They'll offer this without penalty. And if homeowners are seeking to blend rates, most financial institutions will accommodate their clients without penalty to be able to hold on their business. But sometimes it is worth paying the penalty to break the contract and select a new mortgage or lender.
 
As interest rates hit historically low rates, all homeowners must be applying this opportunity to consider early mortgage renewals. This may mean canceling an existing mortgage contract to take advantage of a brand new rate and term. Or, it could mean staying with an existing lender and blending rates. In either case, the low rates must be on every homeowner's radar.


Mortgage, Finance, Alberta


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Barb Pinsent

Fort McMurray, Alberta

780-370-1490
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