Is Your Mortgage Up For Renewal In The Next 3-6 Months?
Carola Singer • December 2, 2020
While this potential second wave of COVID-19 is causing uncertainty in the Canadian economy, understandably, many homeowners are on edge. And although it might feel right to sit tight and see how things pan out, if your mortgage is up for renewal in the next 3-6 months, now is actually the best time to have a conversation with an independent mortgage professional to discuss your mortgage options.
This is especially true if you’ve seen a reduction of income due to the pandemic, taken any government assistance, or if you’ve deferred (or missed) any of your mortgage payments. Any of the above might not impact your renewal, but the whole reason you plan ahead on things like this is to make sure you aren’t left without options by leaving it to the last minute. We haven’t seen the full impact COVID-19 has had on mortgage financing, don’t wait until the last minute to secure your renewal. Planning ahead is the smart move.
Did you know that many Canadians sign the renewal letter they receive in the mail from their current lender without a second thought? They assume that the lender is looking out for their best interest. The truth is, all lenders know this and rarely offer their best rate or terms at the onset of negotiations. And that is exactly what a mortgage renewal is, a negotiation.
Don’t be led to believe that a mortgage renewal is a simple transaction, that you should just take what your lender offers you, look at all your options. Now, this doesn’t mean just looking at all the terms offered by one lender; it means looking at products from multiple lenders. You do this by working with an independent mortgage professional.
When you work with an independent mortgage professional, you receive the expertise of a trained banking professional who is working for you and not the bank; at no cost to you!
As we move into an uncertain economic future, you might want to look at mortgage terms and options that might be different from what you’ve gone with in the past. Just because you took a 5-year term previously doesn’t mean you have to go with another 5-year term. You have lots of options.
Interest rates are at an all-time low, making it a perfect time to ensure you’re getting the best deal on a mortgage. I’d love to help you with that. Contact me anytime! At the very least, by having a quick conversation, we can assess your financial situation and see if the renewal letter you received is a good deal.
RECENT POSTS
When you apply for a mortgage, your employment history and status carry a lot of weight. Even if you feel secure in your job, lenders need proof that your income is reliable and will continue. To them, your employment status is one of the strongest indicators of whether you can make your mortgage payments long term. Here’s how lenders typically view different employment situations: Permanent Employment This is the gold standard. Once you’ve passed any probationary period and hold permanent status, lenders see you as a lower risk. It shows that your employer is committed to you, and your income is steady. Probationary Periods If you’re still on probation—usually 3 to 6 months, though sometimes longer—lenders may hesitate. That’s because your employer can end your contract without cause during this period. Once probation is over, you’re considered more secure. That said, context matters. If you’ve worked with the same company for years as a contractor and just transitioned into full-time employment, lenders may accept a letter from your employer confirming that probation is waived. Documentation is key here. Parental Leave Being on or about to take parental leave doesn’t mean you can’t qualify for a mortgage. As long as you have a letter from your employer guaranteeing your position and return-to-work date, lenders can use your regular salary—not your leave income—when assessing your application. Term Contracts This is one of the trickiest categories. Even highly skilled professionals with strong incomes can face challenges here. A term contract has a start and end date, which makes lenders question the stability of your future income. To use term-contract income, lenders generally want to see at least two years of history, or proof that your contract has already been renewed. The more evidence you can show of consistent employment, the stronger your case will be. The Bottom Line If you’re planning to apply for a mortgage, it’s important to understand how your employment status could affect your approval. Whether you’re starting a new job, coming back from leave, or working under contract, lenders want documentation that proves your income is reliable. 📞 If you’ve recently changed jobs or are planning a career shift, let’s connect. I can help you prepare your file so you qualify with confidence and avoid surprises in the approval process.
The Bank of Canada announced today that it is holding its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. The tone of today's announcement is notably more optimistic than previous months. Here's what's changed and what it means for you.
