When we receive a member’s mortgage renewal notice, we love to use the opportunity to invite them in for a chat. The goal of the meeting is to choose the best mortgage term for them, but we do so by looking at their overall financial situation. The term ‘Mortgage Renewal’ refers to when you buy a home, you and your lender will come to an agreement about the repayment of your loan for a specified period. This specified period is your mortgage term. At the end of the term, you will need to renegotiate and choose a new term, pay your loan off in full or choose a new lender. 

Your goals have likely changed since you first bought your home or since the last time you renewed your mortgage. This means that when you renew your mortgage, it may be time for a change. If you decide to choose a new lender at the end of your term, you will have to once again go through a mortgage approval process, including being subject to a mortgage stress test. This means you will need to qualify for your mortgage at a rate higher than you may actually be paying. If you decide to keep your mortgage where it is, to make sure your renewal suits your needs, here are a couple of questions to ask:

1. What are my options for mortgage terms? There are two different types of mortgage terms. An open mortgage allows for flexibility in paying your mortgage off in full and is usually a shorter amount of time. A closed mortgage means that you are locked in for the full length of time and if you decide to sell before the term is up, there will be penalties. You will also be limited in the additional payments you can make. You can choose terms between 6 months and 5 years in length.
2. How do I choose the best mortgage term for me? To determine the best mortgage term for you, consider your goals: how long you plan to stay in the house, how soon you will have your mortgage paid off and changes in your overall financial outlook. For example, if you know you’re staying in your home for the long haul and want stability with your payment and interest rate, a five-year fixed term is a great option. It’s also the most popular option but it isn’t right for everybody. If you know you’re planning to move in 6 months, you don’t want to lock yourself in for a five-year closed mortgage.  If your credit has changed since you purchased your home, you may want to choose a one or two-year term while you’re working on improving your credit. Doing this can result in a better rate of interest the next time you renew. Talk to a CUA advisor for help choosing a mortgage term that best suits your needs.
3. How can my mortgage get me where I want to be? After you have owned your property for a considerable period of time, you may be able to access the equity you’ve built in your home. This is a great opportunity to consider a product like a Home Equity Line of Credit. CUA also has a cash back option, where you can get up to 5% of your full mortgage amount back in cash to help pay for the things that matter most to you. I have often seen members reinvest this cash back into their home, by making energy efficient upgrades or completing home renovations.

Whether you want flexibility or stability, a lower rate or cash back, we’re here to help make your mortgage work for you. If you have questions about your mortgage renewal, buying a home or your finances, a member of the CUA team would be happy to help you. Call 902.492.6500 to book an appointment. You can also complete the form below and have a member of the CUA team reach out to you.

Revised Jul. 4, 2021

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