If your mortgage is up for renewal, your bank or financial institution may send you a courtesy letter, telling you as a valued customer you can simply sign and be renewed for another 5 year term. What you might not know is that signing that paper can cost you a lot of money! You might assume that, as a loyal customer, you are automatically offered the best rates. This is usually not the case. Regardless of which bank you had your mortgage with – it pays to shop around. You do not have to renew with the same institution.
When shopping mortgage rates, your best bet is to use a qualified mortgage broker. A mortgage broker works for you – not the bank – so they can offer unbiased advise. With a mortgage broker, you fill out one application form and they shop your loan over lenders across Canada, including banks, trust companies, credit unions, finance companies – even private lenders. They can find you the best deals and terms, yet there is no charge for their services.
We asked Claire Drage of Mortgage Medics why it is important to shop around before you renew your mortgage. She explains, “Most people are good about shopping around to get a mortgage, but don’t do due diligence when renewing a mortgage. They are often shocked at how much they can save over the offer their bank sends them. While rate is important, it is not the only factor to consider. We sit down with the home owner and look for strategies to save them money and help them pay off their mortgage faster.’
Some factors to consider when you go to renew your mortgage is whether your financial situation has changed, and how much risk tolerence you have. Perhaps you have more disposable income now then when you first bought your home. In that case, you may want to consider an accellerated payment schedule or higher payments per month to be mortgage free faster. Perhaps your financial situation is worse, due to job loss, additional expenses or other reasons. In that case, you may want to renew your mortgage for a higher amount by borrowing against the principal. Renewing a higher amount for your mortgage may make sense since this form of secured borrowing carries a much lower interest rate than credit cards or unsecured lines of credit. Even if your situation has stayed the same, your mortgage expert can look for ways to save you money and find the best rates.
If you are looking for a mortgage renewal in Oakville, Mississauga or the GTA, call the Mortgage Medics at for a free consultation at (905)-847-6611.