What happens to Amortization on Mortgage Renewal?

RE123RE

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Jan 22, 2016
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#1
Hello,

When a mortgage, say 3 years term, comes up for renewal, is the new amortization the remaining amortization or can you bring it back to the original 25 years term in order to lower your monthly payment amount?

Example:
$1,000,000 CIBC mortgage
25 years amortization taken June 1, 2015
Term ends June 1, 2020
Principal on June 1, 2020: $900,000

If you simply renew, and do not want to go through a refinance on June 1, 2020, what will CIBC normally do?
Continue your 900K loan with 25 years amortization or only the 20 years amortization left?

The last will obviously result in higher monthly payments.

Is this negotiable, meaning can you ask to bring amortization back to 25 years (with the new balance/principal of course), or rarely?

Thank you.

Regards,
Neil

PS. The question is about amortization, not interest rate so did not mention that. I understand interest can, and probably will, change on renewal.
 

nsalama

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Oct 8, 2012
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#2
Yes you can bring back the amortization to 25 years, and the bank will be happy to do it since this means that you will be paying more interest. It's a win win as you lower your payments and would be in a better position to qualify for more financing down the road plus higher cash flow.

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RE123RE

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#5
Thank you. so as opposed to nsalama's opinion, unless you apply for a New mortgage, the new amortization will be the remaining time frame and monthly payments higher than they would be with 25 years.

Nsalama, are you saying on renewal you can easily bring back to 25 years amortization from experience? or just guessing?
The banks are tough these days you know :) Thanks
 

RE123RE

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#7
The amortization stays the same at renewal unless you request it changed.
By 'stays the same' you mean the new monthly amount will be calculated based on the new interest rate and remaining years, not 25, right?
Not back to 25 years.
Regarding 'unless you request it changed', well that's the whole question - how easy is it to change it?
Just ask, Or will most banks say 'Sorry, new application please'!?
Thanks
 

Tina Myrvang

Client Care Lead
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#8
Correct! remaining amortization is what you will be calculated on. You will only go back to 25 if you request a change to your Amortization
 

nsalama

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Oct 8, 2012
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#9
Thank you. so as opposed to nsalama's opinion, unless you apply for a New mortgage, the new amortization will be the remaining time frame and monthly payments higher than they would be with 25 years.

Nsalama, are you saying on renewal you can easily bring back to 25 years amortization from experience? or just guessing?
The banks are tough these days you know :) Thanks
I phoned my financial advisor at Scotiabank to find out. Typically, if you started at 25 years amortization and a 5 year term, at renewal your amortization would be at 20 years. If you want to go back to 25 years you would need to qualify. Scotiabank however has a product called STEP whereby if you have good credit and history with the bank, they have a work around to go back to the 25 years amortization at renewal. Rate may be different though. Hope this helps. Nabil.
 

lendmorefinancial

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Aug 1, 2018
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lendmorefinancial.com
#10
Hello,

When a mortgage, say 3 years term, comes up for renewal, is the new amortization the remaining amortization or can you bring it back to the original 25 years term in order to lower your monthly payment amount?

Example:
$1,000,000 CIBC mortgage
25 years amortization taken June 1, 2015
Term ends June 1, 2020
Principal on June 1, 2020: $900,000

If you simply renew, and do not want to go through a refinance on June 1, 2020, what will CIBC normally do?
Continue your 900K loan with 25 years amortization or only the 20 years amortization left?

The last will obviously result in higher monthly payments.

Is this negotiable, meaning can you ask to bring amortization back to 25 years (with the new balance/principal of course), or rarely?

Thank you.

Regards,
Neil

PS. The question is about amortization, not interest rate so did not mention that. I understand interest can, and probably will, change on renewal.
Hey Thomas
Thanks for your information it is very helpful to others.
 

David8043

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Feb 29, 2016
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#11
Do not just talk to a mortgage broker when you need a new mortgage. Talk to one at every renewal. My experience is that about half the time, a good mortgage broker can get you a much better deal than renewing with your existing lender. If the existing lender offers you the better deal, it cost you no money, and only a little time, to get that second opinion from the broker.
 

RE123RE

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Jan 22, 2016
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#12
Do not just talk to a mortgage broker when you need a new mortgage. Talk to one at every renewal. My experience is that about half the time, a good mortgage broker can get you a much better deal than renewing with your existing lender. If the existing lender offers you the better deal, it cost you no money, and only a little time, to get that second opinion from the broker.
THANKS
 

RE123RE

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Registered
Jan 22, 2016
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#13
I phoned my financial advisor at Scotiabank to find out. Typically, if you started at 25 years amortization and a 5 year term, at renewal your amortization would be at 20 years. If you want to go back to 25 years you would need to qualify. Scotiabank however has a product called STEP whereby if you have good credit and history with the bank, they have a work around to go back to the 25 years amortization at renewal. Rate may be different though. Hope this helps. Nabil.
THANKS
 

KhoaN

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#14
Usually you could stretch back to the amount of amortization that you were ahead of your schedule due to low interest or lump sum paid down without new application. Any more than that, you need to complete a new application.

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ThomasBeyer

Senior Forum Member
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#15
Usually you could stretch back to the amount of amortization that you were ahead of your schedule due to low interest or lump sum paid down without new application. Any more than that, you need to complete a new application.

Sent from my SM-G960W using myREINspace mobile app
I would say this is not correct. Some banks might allow it but not all, and many ( or most even ) treat it now as a new application.

Even mortgage renewals at the low amortization of say 10 or 15 years are now being offered at crappy rates unless one fills out a brand new application.


Thomas Beyer, Asset Manager, Investor, Community Improver, Author, Father, Mentor www.prestprop.com