Til’ death do us part (you and your mortgage)
Buying a home is often the biggest financial commitment we’ll ever make. So when your mortgage comes up for renewal, it can be tempting to simply sign whatever your bank puts in front of you and move on. But should you?
My longtime friend Yeni Kim is a mortgage broker who knows this world inside and out. We met almost 10 years ago through a church softball league and quickly became friends (probably helped by the fact that we both grew up in Etobicoke, Ontario).
For this month’s Money column, I asked Yeni to share what homeowners should know before renewing their mortgage: how the process actually works, what your bank may not tell you, and why shopping around could make a very real difference to your finances.
I found her advice incredibly helpful — and if you have a mortgage renewal coming up, I think you will too.
Read on!
-Rosemary
As a mortgage broker, I spend a lot of time talking with homeowners about one of the biggest financial commitments they will ever make. And one thing I’ve learned is that a mortgage decision is rarely just about finding the lowest rate. It’s about understanding your options and making choices that support your life, your priorities and your financial well-being.
As Christians, we are called to be good stewards of what has been entrusted to us. Luke 14:28 reminds us to “sit down first and estimate the cost.”
That principle applies to our finances too. Whether you’re renewing a mortgage, refinancing, consolidating debt, accessing equity, or considering a real estate investment, it’s worth taking a step back and asking whether your current strategy still supports where you’re going.
Don’t just renew. Review.
When your mortgage comes up for renewal, you don’t have to simply accept the offer your bank sends and continue as usual. In most cases, renewal is one of the easiest times to make changes because you can move away from your existing mortgage without paying a mortgage-breaking penalty.
For homeowners with a property worth $1 million or more, the home may be one of their largest financial assets. Yet the mortgage is often treated simply as the loan used to purchase it. As your property value and equity increase, it may be worth looking at the mortgage differently — as one part of your overall financial strategy.
Rather than focusing only on the interest rate, ask yourself:
“Is my mortgage structured to support my financial goals?”
Maybe your priority is improving monthly cash flow. Extending your amortization — the length of time you have to repay the mortgage — may reduce your monthly payments. If your family is growing and you need a larger home, restructuring the mortgage may also help manage the transition, although you’ll still need to qualify based on your income and financial circumstances.
Maybe interest rates have changed significantly since you first purchased your home, and your payments are going to look very different at renewal. Refinancing may be worth exploring, particularly when you can make the change without a breaking penalty.
You may also have equity that could be put to work. Perhaps you’re planning a major renovation, consolidating higher-interest debt, or looking for additional flexibility. Depending on your circumstances, refinancing or a mortgage product that combines a mortgage with a HELOC may provide options worth considering.
And you don’t necessarily have to leave your current bank. You can compare what they’re offering with other lenders, look at different mortgage structures, and determine whether the best solution is a new lender, a different product, or simply a better arrangement with your existing one.
We often hear from clients who are nervous that asking questions or exploring alternatives could somehow put their mortgage renewal at risk. There’s no reason to make a financial decision out of fear or simply because it feels easier to sign and move on.
Your mortgage is a significant financial commitment. Taking the time to understand what you have, what has changed, and what you’re trying to accomplish can help you make a decision that aligns with your goals, values, and peace of mind.
This is also why it can be helpful to get a second opinion. Your bank can explain the products it offers, while an independent mortgage professional can help you compare other lenders and mortgage structures as well. The important thing is to understand your choices before making a decision.
When the renewal notice arrives, don’t just renew. Take the opportunity to review.
Ask questions. Compare your options. Consider what has changed in your life and finances since you last chose your mortgage. A little extra due diligence at renewal could have a meaningful impact over the years ahead.
Yeni Kim is a Mortgage Broker at Flow Lending Group, helping homeowners, business owners, self-employed professionals and real estate investors navigate their mortgage options. She can be reached at Yeni.kim@yenimortgages.com.
