Renewal Basics

Mortgage Renewal and Transfer Process: Basic Knowledge

One month before your existing mortgage matures, you normally receive a letter from your bank advising you that it's time to renew your mortgage with them. The timing is right for this bank. Is it right for you? The answer is NO. This is late.

But, it is not too late to shop around for a better mortgage than what was offered from your bank. Your bank often gives you the renewal options of 1,2,3,4,5 year renewal options. What the payments would be and what the interest rate that they're offering you at that time. Often, especially with the large chartered banks, they'll just offer you the posted rates that you'll see in the bank. They won't give you the best deal that they're willing to offer, say, a new client. The deal they probably offered you to lure your business in the beginning when you bought your house or arranged a mortgage with them. So that's one thing you have to watch.

Then, there is the question you need to answer: are you going to accept the higher rate or are you going to see if other options are available?

Here are a few things you need to consider on the renewal of your mortgage:

1. Understand Your Current Mortgage

There are a few things you need to review to determine if your mortgage can be transferred to another bank or lender.

(1) Is your mortgage a regular mortgage? If your mortgage is registered as a mortgage with a term (e.g., 1, 2, 3, 4, 5) and your mortgage is said to be transferable by your bank, it usually is. You still need to review if you are given a line of credit which you have not used at all. If there is such a component, your mortgage may not be regular or transferable.

(2) Is your mortgage a collateral mortgage? If your mortgage is an equity home line of credit, or a mortgage with multiple components (1 year fixed rate component plus a line of credit), your mortgage is not transferable. There are situations that a collaterial mortgage is registered to multiple properties. These type of mortgage are not transferable without legal fee.

(3) Some mortgages can have peculiarities to the lender that are not transferable. They may have certain special characteristics on it like maybe it was done by a trust or something like that and it is something the new lender cannot take.

The best way to be sure on this is to review the "Registered Charge" document when you had your mortgage through your lawyer. Or, you can fax or send it to Valueland for our review to determine if your mortgage is transferable without a fee.

(3) Is it better to break up a current mortgage that does not mature to get your low rate mortgage? You need to do some calculations: savings of interest with a Valueland mortgage, cost to break your mortgage. If the savings is more than the cost, you are advised to transfer.

These three steps will save your time and effort in your transfer process.

2. Is it a transfer or a refinance?

A mortgage transfer is to take your exising mortgage balance to a new lender without involving a lawyer. Whereas in a refinancing situation, you want more money than the outstanding mortgage balance. See Mortgage Refinance Basics.

3. Shop Around to Get the Best Mortgage

Once you are sure that your mortgage is freely transferable, the next thing you do is to search for the best mortgage.

Here you can either visit Valueland's website or other mortgage lenders' sites to find the best deals possible.  You would want to keep notes of what you would get from the lenders and their terms and conditions.

4. Review Your Findings with Your Bank

At this stage, it is absolutely a good idea to talk to your bank on their renewal offers. You may want to have the following converations with your bank:

You:              "Is this the best offer from you?"
Your banker:  "Yes."
You:              "Can it be better for a good and loyal customer?"
Your banker:  "OK. I will give you ..."
You:              "It looks like that there are better rates eleswhere."
Your banker:  "This is the best we can do."
You:              "Thank you for your help."

5. Apply from Valueland

You have done your part with your bank by negotiating for a better deal from them. Now, it is time to get a mortgage approval. You will spend some time to work with us so that we can provide you with a good deal, together with unbiased professional service.

You can actually start your application 120 days before your renewal date. Valueland can lock you a best rate for up to 120 days. So, start early to get your rate locked.

You can download an application form and fax in the completed form.

6. Costs for Transferring Your Mortgage

(1) Discharge Fee: This fee is charged to take that bank and discharge the mortgage off for government's land registry. It's usually about $200 to $300 to discharge.
(2) Appraisal Fee: This fee is charged by an appraiser to visit and report for the value of your property. The fee is usually in the range of $120 to $265.

These two charges are usually absorbed by either the bank or Valueland Mortgages.

7. Some Lenders Are Wasting Your Time

You have asked the bank for a better offer. They did not give you. You spent quite some time to get a better offer from Valueland or another entity. Valueland spent its time and resources to get you the best deal. After all these, a few days before the date of transfer, your bank calls you to say that they would give you the same deal.

What do you do? To reward our work and to punish the bank for not giving the best offer at the time you asked, we trust that you shall say "Thank you for the late offer. I will stay with Valueland."

8. Renewal When It Suits Your Situation

There are cases that you may want to renew with your current bank. You might have changed your job. You may have lost your job. You may have run into some credit problems, so you may not qualify for a mortgage from a new lender. So, your bank may not go through the process to requalify you as long as you are paying them the regular payments.