Stop! Don't sign!

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Mortgage renewals are one of the most neglected decisions made during the life of a mortgage. Many homeowners stay with their existing mortgage lender because they believe it is too time consuming to shop around for a better rate. Or, they simply think that the offer from their existing bank is the best deal available. Unfortunately, that is not correct! 

Bank renewal rates are extremely high because most people unfortunately do not take the time to shop around at renewal time. The reality is that you are not going to take the same care and diligence that you did when you first took out your mortgage.

As a result there is very little incentive for the bank to offer you their best rate at renewal time. They are really hoping that you will just sign the renewal notice you receive in the mail and be done with it.

The latest retention tactic by banks is the early renewal offer. Why do they want you to sign an early renewal? To prevent you from shopping around. They want to lock you in before you do any comparison shopping and it looks like six out of 10 bank customers are signing up for an early renewal offer.

If you do receive an early renewal offer from your bank take the time to speak with a mortgage broker who will not only shop the market for you but also do a full review of both your short-term and long-term goals. There are so many factors to consider such as switching costs, the potential for rising interest rates, etc. A second opinion and some number crunching is very important and it really doesn’t take that much of your time.

Remember that there is no reason to bow to the pressure that your bank may be putting on you to sign their offer early. Take your time and investigate all of the options available and make sure that offer is really as great as it sounds. You might have to dig up some paperwork and go through an application process but if it will save you money on your overall cost of borrowing – why not switch?

There are many mortgage lenders in Canada that only work through mortgage brokers. If you would like to explore all of your options when your mortgage is up for renewal please give me a call at 250-826-3543 or email [email protected]

We can start exploring options up to six months before your mortgage renews so it’s never too early to start. A little known fact – in most cases there is no cost for me to switch your mortgage to a new lender.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.