How to know if your mortgage product is still the right match

Is your mortgage product still a good fit for you? This depends on several factors. Your current product was likely your best option when you bought your home, but what about now? Your needs may have changed, along with market conditions and mortgage rates. It’s normal to wonder whether you are still using the product that serves you best. Here’s a few tips to help you determine if you should consider switching things up!

Think back to your original goals

When you first bought your home and secured your mortgage, you would have had certain priorities or goals in mind. If you were self-employed or had fluctuations in your income, for example, you may have been looking for the most flexible product. If you were buying your first home and trying to keep costs down, you might have opted for a product that permitted lower monthly payments. Depending on market conditions at the time, you may have been more or less willing to take on risk and potential rate fluctuations.

As time goes on, you might find these priorities have changed. It makes sense that if you bought your home five years ago, for example, your circumstances may have shifted. Maybe you have a more stable or traditional income source, and could qualify for a mortgage with a conventional lender. Perhaps you want to start building equity faster so you can access the cash flow needed for a renovation. You might even be thinking about retirement and how your mortgage ties into it. Whatever the case, it’s important to consider how your original goals and priorities may have evolved, and whether your mortgage product is due for a change.

Have you experienced financial or lifestyle changes?

Your mortgage should reflect your situation and lifestyle. This means it should fit you, and you should not be trying to adjust your circumstances to meet the requirements of an ill-fitting mortgage product. Of course, we may go through several lifestyle changes, and this doesn’t always mean your mortgage is due for reconsideration. However, in some situations, there are clear signs that it’s time to reevaluate.

One of the most common changes people encounter is an increase or decrease in their income. This could have a direct impact on your mortgage payments, which means it is important to evaluate your product at this point. Perhaps you have decided to branch out and start your own business as a self-employed individual. This type of financial change might call for a product with some more flexibility. Are you going through a tougher financial period and struggling to meet your payment obligations? Many home owners can use their mortgage and home equity to their advantage here. These types of major shifts can be a clear indication that you should sit down with a broker to discuss your current product.

Are your prepayment options right for you?

Depending on your current product, you may or may not have flexible prepayment options. This means having the chance to make additional payments toward your mortgage, on top of your regularly scheduled payments. Putting this extra money toward your principal balance means paying off your mortgage sooner, reducing interest costs and owning your home free and clear.

Many home owners who are financially able to pay their mortgage off sooner will choose to do so if possible. However, some lenders are more flexible than others in terms of prepayments. If you are trying to clear your balance quicker but aren’t making the progress you’d like with your current product, it might be time to consider a switch.

Are you approaching renewal time?

Before you make any decisions related to your mortgage product, you should confirm whether or not your mortgage is coming up for renewal in the near future. Renewal time is the perfect chance to evaluate your product and see if you should consider any changes. Lenders will typically send a renewal offer a few months in advance, and it may feel like instinct to immediately sign it. However, you shouldn’t automatically assume you still have the best mortgage product out there! 

This is the perfect time to meet with your mortgage broker to assess your situation. Are you hoping to land a better rate, up your prepayment privileges, or shorten your amortization period, for example? Now is your chance to explore these options. If you decide to move in a different direction, you can do so at renewal time without penalty.

Your mortgage product isn’t something you should sign off on once, and then never think about again. As your lifestyle and circumstances change, it makes sense for your mortgage product needs to evolve as well. Be sure to reach out to your broker if you think a change could be beneficial! We are happy to walk you through your options.

If you have any questions about your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.