What Should you do at Maturity
January 19 2016 Posted by Siemens Group
At your maturity date, you can either renew your mortgage with your existing lender or transfer your mortgage to a new lender. Your mortgage maturity provides an opportunity to reconsider your mortgage strategy, including whether you prefer to proceed with a fixed or variable strategy, how long a term you would like, and whether the mortgage product offered by your current lender will be a good fit for you for the coming years.
Frequently lenders tend not to offer their most competitive rates upon renewal. They are aware that most borrowers do not look for the best rates at renewal as diligently as they do when they are purchasing, and frequently lenders use this as an opportunity to sell the clients higher rates than they can otherwise offer. They are relying on the fact that most borrowers will simply tick the box on the renewal letter and will not challenge them on the offered rate.
Your best strategy is to be in contact with us at least 4 months prior to your mortgage maturing. We can review your mortgage needs for the upcoming term to ensure that you will be in a mortgage product that will suit your needs. We can also begin to hold rates for you- this basically provides you with free insurance against rate increases, because if rates increase over the 4 months until your maturity date you will be able to take advantage of the rates that we have secured for you, whereas if rates decrease we will continue to secure lower rates as they become available.
When your maturity comes, we can either assist you with renewing directly with your existing lender by ensuring they are offering you competitive pricing. Alternatively, if it makes sense for you to transfer to a new lender at maturity, either to get a better rate or a product that will better suit your needs, we can assist you with that process.
How do I transfer my mortgage?
The process is typically quite simple. Once we determine what your mortgage needs are, we will need to take your application and gather supporting documentation to confirm your mortgage details to the lender. In a transfer you typically cannot increase your mortgage amount or your amortization.
You will have to pay your existing lender a small discharge fee, however, all other fees are typically picked up by the new lender. The discharge fee will range depending on the lender, but is typically $75 for mortgages in BC.
As more lenders move toward registering their charges as collateral charges (which cannot be transferred to a different lender at maturity), switching lenders at maturity may become more challenging; however, we have the experience and expertise to assist you with this process and ensure that it is as straightforward as possible.
When are legal fees involved?
When you need to add to your amortization or your mortgage amount, or if your existing mortgage is registered as a collateral charge, you need to refinance rather than transfer your mortgage to move to a different lender, even at maturity. The cost associated with this typically ranges from $550-$800, and is required because the existing charge at the land title office needs to be removed, and replaced with a new one. This process requries the involvement of a lawyer or notary.
Some lenders offer legal packages to offset this cost; however, if obtaining that package requires paying a higher rate than would be available at a different lender it is often worth paying legal fees up front to secure a lower rate for the mortgage term, and therefore greater interest savings.