Making Your Plans A Reality

When you receive a letter that it’s time to renew your mortgage, the first thing you should do is contact a mortgage broker. We can tell you if your current lender has offered you a good rate and the best terms for your needs or whether there are better options out there for you.

The second thing you should do is note how your life has changed since you took out the original loan or last renewed it. Has your family grown and you need more space? Do you have some debt you’d like to pay off? Did you get a big raise and are ready to pay off your mortgage? Get clear on how your life has changed and how this has impacted your finances and living situation.

Lastly, take some time to think about what you would like your life to look like five, ten, or twenty years down the road. Are you planning to buy your forever home soon? Do you want to retire at 55? Are you hoping to be financially free at 60?

The clearer you are about your needs, the easier it is for us to help you get to where you want to go. A renewal might not be the best decision, maybe it’s a refinance to pay down your mortgage faster or help you tap into the equity of your home to fund projects that will help you reach your goals sooner. Whatever the case, it’s our job to help you find the right strategy for your financial future.

When your mortgage term is coming to an end, your current lender will require you to sign up for a new term or pay the mortgage back in full. When you renew your mortgage you are agreeing to stay with your current lender with the same terms and conditions. The only thing that will change is the rate and the lender might even offer a different term length - such as two years or three years.

If the rates have decreased you may be offered a lower rate, but if you want to take out equity or increase the mortgage amount or extend the amortization length, you’ll need to refinance.

A refinance involves taking out a new loan to pay off your current mortgage loan. The new loan will have a different interest rate and terms, ideally a lower rate and better terms that match your goals. You can also refinance to switch from a fixed rate to a variable one, increase your total mortgage amount and roll some of your high-interest debt into the payment. A refinance is also an excellent way to change up your amortization period length or to tap into the equity of your home to extract money that you can put to good use.

Refinancing can help in many ways.  You can:

• Switch to a new lender and get a better interest rate to save more money.
• Consolidate debt or increase the amortization period to get a lower monthly payment and free up your cash flow.
• Leverage the equity in your home and take out some of that equity as cash - cash you can use to make a big-ticket purchase,  invest in your RRSP to fuel your retirement savings or put towards a downpayment on a rental property.

Many Canadians this year tapped into their equity to renovate their homes, giving their value an instant boost and helping them sell for more money. Some even refinanced to pay for their kid's university education. There’s a lot you can do when you refinance, the goal is to do it strategically, which is where a Pineapple Mortgage Professional comes in.

Yes, you can refinance at any point in your term, however, it’s important to know that if you plan to refinance before your term is up - or in mortgage lingo “ before the maturity date” - you can face prepayment penalties. But if you wait until the maturity date when your mortgage is up for renewal, you can refinance without facing those penalties.

But don’t let that stop you. There are ways to avoid those penalties or have the amounts wrapped into your mortgage so that you don’t have to pay for anything out of pocket. A Pineapple mortgage broker will explore all those options and help you find a solution that works best for you.

If you refinance your mortgage and get a lower interest rate you can reduce the amount you pay each month. You can also refinance to increase the amortization period, which will also reduce the monthly payment amount.

Lowering your payment by increasing your amortization will improve your cash flow but it’s not always the best option as it will take longer to pay off your mortgage and will increase the interest payments in those added years. Our goal is to determine the best strategy for you to take that will improve your cash flow and also help you pay off your mortgage sooner.

A fixed-rate mortgage is better for those who are risk-averse. Because a fixed rate locks you in for the length of your term, you don’t have to worry if the Bank of Canada decides to raise rates - your payments are going to stay the same.

A variable rate is better for those who can handle a little risk. So ask yourself, would you sleep comfortably at night if your mortgage payment fluctuated from one year to the next or if it suddenly increased by $200 one month? If the answer is no, you might want to consider taking a fixed-rate mortgage. But don’t worry, if you’re not sure what’s best, we’ll help you figure out what option is right for you based on your short and long-term goals.

1. You don’t have to refinance with your current lender. If there are better rates and terms out there for you, a Pineapple Broker can help you find it.
2. The lowest rate is not always the best option. Some low-rate options can actually cost you more money in the long run.
3. Taking out cash as equity will increase your mortgage amount so it’s important to have a strategy to pay down your mortgage and use the cash wisely.

At Pineapple, we use advanced data analytics that notify our mortgage professionals when there are cost-saving or wealth-building opportunities available for you over the life of the mortgage. This means they can identify when there are opportunities to add a lump sum payment to reduce the life of your mortgage for instance. Our system will even let me know when it’s time to lock your mortgage into a new rate because interest rates are on the rise.

Our AI-driven technology also makes it possible for you to apply for a mortgage completely online in the comfort of your home. But most importantly, you should consider Pineapple because of the service that we will offer you. We are 100% focused on your financial future, not just your short-term goals. We look at finding you the right solutions to help you retire sooner and reach financial freedom faster.