The-Mortgage-Gal

Don't renew that mortgage!

Don’t renew that mortgage . . . until you’ve learned about the following.

Is your mortgage coming due in the next few months? 

When your mortgage is up for renewal, it’s a good idea to talk to me or to your regular mortgage broker about your options. 

It is a paradox of our times: When there is a large sum of money to invest, most people don’t hesitate to contact a financial planner. A mortgage is probably the largest debt you will ever have, yet only about 25-30% of mortgagees consult a mortgage expert.

Many people just sign their mortgage renewal and send it back to their bank without even checking the current mortgage rates offered by brokers. Brokers represent many borrowers, so they are usually able to get more competitive rates for their clients. 

However there are more important considerations when renewing a mortgage, such as prepayments options and penalties.

Lenders who are offering low rates on the Internet will often restrict the amount of principal that can be paid down on the mortgage during the locked in term. This can cost the borrower thousands of dollars in interest costs. 

Many of my lenders offer anywhere from 10-20% repayment options, and 10-20% in payment increases. I usually suggest that my clients try to utilize these options to save them thousands of dollars over the life of their mortgages.

Another consideration are the payout penalties. 

While most borrowers don’t select a 5 year closed mortgage expecting to pay it out before the mortgage is due, statistics show that most mortgages are refinanced or paid out within 3-4 years.  This can cost the borrower thousands of dollars in interest penalties.

Did you know that some financial institutions calculate the Interest Rate Differential (IRD) using the posted rate at the time the borrower took out his or her mortgage rather than the discounted rate  they received? 

I, myself, was charged the posted rate on my mortgage when I paid it out, base on the posted rate at the time I locked in rather than the discounted rate shown  on my mortgage commitment.

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About the Author

Laurie Baird and Tracy Head are mortgage brokers with Verico Complete Mortgage Services. Together they have over 45 years of experience in the mortgage industry.

As mortgage brokers, Laurie and Tracy spend time getting to know the people they work with and help them understand the mortgage process. They support their clients before, during, and after a home purchase.

Laurie and Tracy are able to offer their clients advice and options. With access to over 40 different lenders, Laurie and Tracy are able to match the needs of their clients with the right mortgage package. They work closely with their clients to find the right fit, and are around to provide support for years down the road!

Contact them at 250-862-1806 or visit:
http://www.okanaganmortgages.com

Visit Laurie's blog at: https://www.okanaganmortgages.com/blog



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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