A mortgage is a major obligation. People look at their annual mortgage statements to see what they paid, but they rarely think what can be done with their mortgages.
What to look for
When reviewing your mortgage, look at the renewal date, interest rate and prepayment options. By looking these things, it may be possible to find a way to pay off your mortgage faster or save money.
The renewal date is the date your mortgage has to be renegotiated. Knowing this date tells you how long you will be paying the current interest rate.
Take a look at the rate
Reviewing the interest rate is important. It may make sense to get a new mortgage if your interest rate is higher than current rates.
The things to think about when setting up a new mortgage are prepayment penalties, lawyer fees and other expenses.
The question to ask is “Will I save money?” You may also want to think about other debts you have. Would you save money on those debts if they were included in your mortgage?
Look at the pre-payment options. Making prepayments will cut the interest you pay by thousands of dollars unless there are penalties. How much would you save if you used some or all of your prepayment options?
Look at the type of mortgage you have. Is it the right type of mortgage for your current situation? What are the risks attached to the type of mortgage you have? What will happen to your payment if interest rates change?
Your annual mortgage review will tell you if your mortgage is right for you and if you will achieve your mortgage goal.
The calculations can be complicated and you may want to ask your agent for help.