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Mortgage Renewal Strategies
January 17, 2025 | Posted by: Christopher Chanakos
Renewal Strategies
OFSI revealed that 60% of existing mortgages are scheduled to be renewed by the end of 2026, and it estimates that about 60% of these loans (40% of all outstanding mortgages) will face higher interest rates when they are renewed.
There are other repercussions for home owners beyond higher monthly mortgage payments.
First, it can make qualifying with a different lender difficult, especially if you have taken on other debt such as a car loan, HELOC….
Second, as mentioned, as a result of a higher monthly payment, it will reduce your monthly cash flow.
Thirdly, if you need to refinance your mortgage with your current lender, you may have difficulty qualifying.
The current rate environment has made the mortgage renewal process a little more daunting but there are some strategies, as well as some rule changes and products, that can mitigate some of the cost and stress.
First, OFSI has eliminated the stress test for mortgage holders that want to move their mortgage from one federally regulated bank to another. As long as the amortization and outstanding balance remain unchanged.
Second, there are lenders that will debt service the outstanding balance on your HELOC rather than the limit. This can make a huge difference to you monthly debt payment which the bank uses to determine what you qualify for.
Third, as the BOC drops the prime rate, many lenders have reduced their rate discount on variable rate mortgages. However, there are a couple of lenders still offering very strong discounts from prime.
Finally, there are lenders that will make exceptions on the debt service ratios. This means that you will qualify for a larger mortgage with this lender than you would with a lender that imposes the standard 39/44 ratios.
Let's connect and create a personalized renwal strategy that suits your financial goals.