If You Have A Mortgage, You Ought To Know About Mortgage Renewalsthehomemortgage
Mortgage Renewal, as they literally mean, gives you the opportunity to renew your mortgage through a simple and easy process. In it, you are supposed to either continue or get in place of your original mortgage, a new mortgage contract. Your mortgage renewal is done with your current mortgage lender only.
Mortgage renewal is a substitute for mortgage refinancing but is not coincidental with it. So, if your current mortgage repayment date is soon to reach, while you do not have enough finance to pay back your mortgage, you can opt for mortgage renewal. Depending on various factors such as your financial situation, verge of bankruptcy, existing interest rates, your new mortgage’s terms and conditions are framed. The mortgage renewal process is quite easy and simple because it majorly requires your consent, while your lender bank is always willing to renew your mortgage. You could relate the process of mortgage renewal to a car insurance wherein your yearly renewal plan letter comes to you and you only sign it and the payment of premiums and insurance cover continue in the same way.
Given below is an example of Mortgage renewal for your complete understanding
You take a mortgage of value X for your home, at 7% interest on a 4-year term. Your monthly payment shall be Y, based upon a 15 year amortization period. However, the term of the mortgage is only 4 years so, at the end of 4 years, the mortgage provider can demand payment in full if the mortgage is not renewed, for which are supposed to either renew your mortgage or find a different lender and other sources of mortgage refinancing.
If you are a good customer, that is, you pay your EMIs timely, your banker only can renew your mortgage. One important aspect to notify is your renewed mortgage will be for the outstanding principal amount at the end of 4 years. All the other things remaining constant and if the interest rates are unchanged, your monthly payment shall be the same.
The following are the important things you must consider while renewing your mortgage
-If the current interest rates have changed from the rate at which your mortgage has been taken
-Towards which direction are the interest rates likely to move
-If the charges and fees of renewing your mortgage are higher than the charges levied by the other lenders
-If you are satisfied on an overall basis with your current lender
In any case, to opt for a mortgage renewal with your current lender is better if there are not any profound differences as you have to put less time and effort in the renewal process, and as we know that time is money.
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