Home mortgage loans are an easy solution for purchasing your new home. Taking mortgage loans have become very common for resolving your financing issues while purchasing your dream home. It is even regarded as a smart investment plan. However, home mortgage loans come with an expiry date too. If you have taken a home mortgage loan then it would be wise enough for you to keep a check on refinance and renewal options.

What Is Home Mortgage Renewal?

Every mortgage loan comes with an expiry date when the term for the loan repayment ends, as decided while making the deal. If the borrower is unable to repay the loan within the loan term, then he or she may opt to renew the loan and then pay the complete amount. The conditions, particularly the rate of interest, would be same as decided during the first term.

Secret Tips For Boosting Your Chances Of Mortgage Renewal

Renewing your mortgage loan after the completion of a year is very convenient. However, it might not be as easy as it sounds. You need a better strategy to approach for loan renewal. Use these tips to enhance your chances of getting your home mortgage loan renewed.

  • Be an early bird: When you have decided to renew your mortgage loan, then make it a point to start early for a new mortgage rate and products. If you are borrowing from the same lender then you can renew it within your loan term ends and also not pay penalty for it. But you may not get the best available market mortgage rate. So, when you have already decided for loan renewal, it is best to take your time to hunt for best mortgage rates, you can even a good mortgage broker.
  • Negotiate for a better rate: A lender sends reminder to its borrowers with renewal offers within 30 remaining days of your term. The lender may offer you a 0.75 per cent discount on the mortgage rate. If you like the deal, then you just has to sign a letter that the lender would be sending you to renew your loan. However, it is not necessary to agree to the rate, you can bargain for a better one. A new lender can offer you a lower rate than the current lender.
  • Your current lender may not be the best lender: When you took your initial mortgage loan, the situations were different, your needs and requirements were different. The same holds true for your lender as well. So when you are about to renew your loan, everything might not be same as before and hence you can consider another lender based on your needs and convenience for the loan.
  • Ask for a rate hold: After you have zeroed down on a particular mortgage lender and rate, you can still ask for rate hold. In fact, you must ask for a rate hold. Generally, a rate hold period is of 90 to 120 days. Getting a rate hold means, you get a 90 to 120 days time window to come back to the same lender and get the loan at the decided interest rate. If there is an increase in mortgage loans during that period, your will not have to pay the increased rate. However, it if the interest rates come down, you can negotiate for the lowest rate.
  • Changing lenders is time-taking: When you change your lender, the new lender would have his unique ways and criteria to test your suitability for qualifying for the loan. You will have to take up a lengthy paperwork – submit a copy of your mortgage renewal letter, income proof, proof of your own home and also a proof of your property insurance. Often brokers take more than a week to complete the process so start early else you may have to stay for another loan term with your current lender.
  • If you are lucky you may switch lenders for free: Usually, brokers help you with switching lenders in exchange of a fee but there are even some brokers who can do that for you for free and cover all of related costs just to get your business. So be patient if it is taking time to negotiate. However, before paying by yourself, if the new lender is willing to cover these costs or not.

What Is Home Mortgage Refinancing?

Refinancing is an entirely different concept. Mortgage refinancing is cancelling the current loan and then opting for a fresh one. Unlike loan renewal, for refinancing, you do not have to wait for the end of a particular mortgage loan term. It can be done anytime, even before the term ends.

Effective Tips For Refinancing Mortgage Loans

Refinancing is another option to repay the loan amount but this time the lender changes. So pay heed to a few tips while opting for refinancing.

  • It takes time: Refinancing is opting for a fresh loan which will include all the processes for loan as before. So make sure you start it early and also be patient with the process.
  • Multiple costs: When a borrower goes for refinancing, lines of credit and other debts gets merged into one. Legal fees and cost of property appraisal is a separate cost and is ideally paid by the borrower besides other costs. Be aware of the costs before opting for refinancing.
  • Provisions for cost-cutting: If you are looking for some cost cutting measures, then you can use the legal service provider of the lender.

Legal aid: The borrower may approach a lawyer if the refinancing process doesn’t start at the stipulated time.