How to Update A Mortgage Payment Schedule After Renewal (Q Win Canada)

CoolWhip

Like many, I renewed my mortgage recently. I had the mortgage setup in Quicken with an amortization and payment schedule. It's worked perfectly for past 5 years. But now, the mortgage terms have changed and consequently the payment is different. What is the best way to handle this transition? Do I need to close the old mortgage account in Quicken and start a new one? How do I transfer the balance remaining to the new mortgage account? Or, is there a way to update the terms of the loan on a go-forward only basis? I see that I can update the loan terms but would that retroactively change past principle and interest payments?

Additional info: The initial mortgage was for a 26 year term for 4 years. Of course, the loan is not paid off and what's being renewed is the balance at end of month 48 for a 22 year amort for a 3 year term. So if I create a new mortgage loan account, how do update the balance of the initial mortgage such that it shows zero and no future payments will be applied using the old amort schedule?

Also, this mortgage account is not connected to the bank per se but the bank account from which the funds are drawn are. So the the mortgage payment shows up in my bank account register as a split principle/interest transaction as per the loan schedule.

Tom Young

I think the best approach here would be to create a new loan Account and, first, set up the Account simply using the new loan's terms - original amount, interest rate, length of loan for amortization purposes, etc.

The first entry made in the new Account by the Quicken loan "wizard" is the Opening Balance, based on your input. Assuming the new loan's opening balance is the same amount as the old loan's ending balance, simply delete that first entry and then, using the same transaction date, Transfer the old loan's ending balance to the new loan. That zeros out the old loan and establishes the opening balance for the new loan, properly. You can then Hide the old Account.

Assuming that you instructed the loan wizard to make entries at the appropriate payment dates into the checking Account, everything should work perfectly going forward.

CoolWhip

That's exactly what I did. I created the new loan and then deleted the opening balance from Loan|Payments. Then I went to the old loan and transferred the balance, which was the same as the loan amount, to the new loan. So the old loan is now zero and the new one has the correct balance. Thanks.

This is quite a few steps for something simple. A mortgage renewal feature in Quicken would be really helpful. When you cerate the loan, instead of asking for just the amort period, ask for the loan term. Then some type of update feature at end of term that lets you edit the existing loan going forward without affecting the past payments.

NotACPA

What you're calling a "renewal" is, actually, the creation of an entirely new loan … probably with different terms than the original.

After 40 years in banking systems, I've never heard of a loan "renewal".

mshiggins

@NotACPA loan renewal is apparently a Canadian loan process.

Arctic Hare

Yes, a "mortgage renewal" is Canadian nomenclature or a Canadian "thing". When your mortgage - from a Canadian lender - is approaching end of term, the (Canadian) lending institution will make you a "renewal offer" (that is what the letter and offer you receive is titled). In my experience, the terms of the "renewal offer" are generally unfavorable and I have always renegotiated. I've always managed to get a better rate by renegotiating.

I agree that the term "mortgage renewal" is a misnomer, but that is the correct nomenclature in Canada; the new mortgage does come with different terms. The "advantage" to the "renewal" is that no requalification is required. It is a very easy process - you just sign the renewal offer form and you get a new mortgage. The tradeoff for that simplicity is generally unfavourable terms. I'd put my mortgage back out to an online broker when I receive the renewal offer. At the very least, this would provide leverage to renegotiate a better renewal offer. I did this last time and my current provider eventually got close to market-best rate with updated "renewal offers", but didn't quite get there, so I switched.

As for the original poster's question - yes, the best approach is to set up a new mortgage in Quicken (i.e. "loan") - and not use the connected mortgage feature!