# Mortgage Renewal



## latebuyer (Nov 15, 2015)

My mortgage renews next year at td in may. In retrospect i wasn't very smart and i have my mortgage with my bank where i have my payroll deposit. My concern is i am laid off and they can see i'm not working. Should i switch chequing accounts or would that look suspicious. I have no reason to believe i'll be laid off but freak things happen. I was thinking of switching to tangerine.


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## Just a Guy (Mar 27, 2012)

From my experience, the mortgage renewal comes fairly automatically...if you make your payments on time, they don't really make any checks to see if you qualify for a renewal.

When you get the note in the mail, go into the the bank and negotiate a lower rate, which you'll probably get just for asking in branch...still no checks to see if your income or anything has changed.

Of course, if you miss a payment, things may be different.


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## Mortgage u/w (Feb 6, 2014)

No one is monitoring your bank account to see if there is a payroll so that you can make the next mortgage payment. 

As long as you pay, no one will come knocking at your door. 

Renewals are automatic. They can't refuse a renewal unless you are already in default.


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## twa2w (Mar 5, 2016)

Both jag and mtg u/w are right. The bank may see you no longer have a direct payroll deposit but they have no idea if you changed that deposit to another bank or are in a new job getting paid by cheque.
While the bank, in theory, can refuse to renew, it just doesn't happen with the big 5 banks unless you are in arrears. And I have seen automatic renewal notices roll out when people are in arrears. 
Keep on trucking with the TD if you are happy with the service etc.


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## latebuyer (Nov 15, 2015)

Thanks for the replies. I think i am nervous about renewing but this makes me feel better.


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## latebuyer (Nov 15, 2015)

I have another question. I'm confused by what happens if i made prepayments. Does that mean if the interest rate was the same i would pay less due to prepayments? Or would i still pay exactly the same? (I realize i probably won't have the same interest rate, just using it for example)


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## twa2w (Mar 5, 2016)

If the interest rate is the same at renewal as you are currently paying, the payments should go down if you have prepaid the mortgage. However, at renewal, you can opt to keep your payments the same, or even increase them. Also you can make a prepayment at renewal that is in addition to your annual prepayment amount.


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## Mortgage u/w (Feb 6, 2014)

Did you make lump-sum prepayments or simply increased your regular payments? And what is your amortization left?

Any prepayments you made were applied directly to your capital. What that does is simply diminish the amortization left on your loan since your capital has decreased. 

Your new payments will be in accordance with the new rate but the big determining factor will be the amortization you set to establish the payments. If you continue the remaining amortization, your payments will be relatively the same. If you increase the amortization back to the original term, then your payments will decrease. Your loan amount has decreased dramatically due to the prepayments on capital and regular payments throughout your term. In contrast, should you want to pay-off your loan quicker, you can set your amortization lower but your payments will go higher - which is similar to making prepayments.


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## Ag Driver (Dec 13, 2012)

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## Just a Guy (Mar 27, 2012)

If you go with a broker, you'll be forced to qualify again...under the new rules.

You can switch to variable rates with your current lender if you wanted to.


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## Mortgage u/w (Feb 6, 2014)

^^ You can definitely be approved elsewhere. My question is why do you want to leave your current lender?

No one forces you to renew - you are free to go when your term is up. Renewal is your opportunity to relook at your finances and adjust accordingly. Maybe you need more money to do some renos or investments. You may want to relook your payments - increase or decrease them according to your current situation. Or you may simply want a better rate, better benefits, or dislike your mortgage rep!

As for rates, not sure you will find any 1 yr variable rates - they usually come in a 3yr or 5yr. I always recommend variable regardless the term - penalty calculations are always lower on variables. Alternatively, you can take a 1yr or 2 yr fixed rate. These too are advantageous since their rates tend to be much lower than a 5 yr fixed. I would stay away from 5yr or longer term rates.


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## Ag Driver (Dec 13, 2012)

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## Just a Guy (Mar 27, 2012)

You can negotiate with your currrent lender for all those terms without having to requalify is what, I think, mortgage u/w was trying to imply. You just need to go in and talk with them usually. Also, ignore posted rates, they tend to be meaningless for everything except calculating your penalty for dismissing your mortgage early.


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## caltran (Mar 16, 2017)

What I do when I renew is I extend the amortization length so that my minimum payment is low. I then have the payment amount after the first month increased to match how I long I want the mortgage to actually last. This way in case of catastrophe I can lower the payment amount.


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## Mortgage u/w (Feb 6, 2014)

You already have good benefits (double/20/20), and rates are rates. Your renewal is still far away so no use shopping around now (unless you meant Nov 2017?) - lots can happen between now and then. You normally start shopping 6 mths before your term-end at which point your current lender will also consider an early renewal penalty-free.

As JAG mentioned, going elsewhere will involve re qualification. You will also incur legal fees for discharging and re-registering the mortgage - unless a switch is possible. I think you should stick where you are and just ask for the best rate possible - when the time comes.


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## Ag Driver (Dec 13, 2012)

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## latebuyer (Nov 15, 2015)

Thanks all. Since my mortgage won't be paid off until i'm 70, I think i'll keep my payment the same so I can shave a few years off. Hopefully interest rates won't go up.


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