Have you received a mortgage renewal letter in the mail? Before simply signing it and sending it back to your lender it is important to review your options.
Improved Rate with Early Rate Hold
The first item to take into consideration is the new interest rate being offered by your current mortgage provider. It has been our experience that renewal rates very rarely compare to the rate specials available to brokers. Even if you choose to stay with the same financial institution your mortgage broker can often negotiate a lower rate on your behalf.
Our associates can also lock in a rate up to 180 days before your mortgage renewal. Have a look below to see the difference this could make.
Client A& B both had a $275,000 mortgage and a renewal date of Aug 1, 2013.
Client A had filled out the renewal reminder request form from our website and was alerted 6 months before his renewal at which point he chose to call us to request a rate hold. We were able to secure him a no fee switch with a 120 day rate hold of 3.89%.
Client B decided to sit back and trust that his bank had his best interests in mind and waited to receive and sign the banks renewal notice that was sent 20 days before renewal. Little did he know that banks are very strategic and attempt to have their clients renew at a rate higher than their current best rates. The banks are fully aware that the majority of clients don’t realize they should have a Brokerage like The PlaceTo Mortgage securing the best rate available as 90% of their clients do not transfer their mortgages and 75% of clients don’t even attempt to negotiate a better rate. By the time client B received his renewal notice (over 3 months after client A) rates had increased by ½ a percent. Unfortunately for client B, this means he will pay an additional $8,000 over the next 5 years in comparison to what client A, who had an experienced professional acting on his behalf, will pay.
Accessing additional funds
The second item to take into consideration is if it would make sense to take advantage of any equity in your home without having to worry about any payout penalties with your existing mortgage provider. This equity may
- Consolidate any credit card debt (request a personalized debt eliminator plan to see the difference this can make)
- Start an investment portfolio (low interest loan – high interest return)
- Take a much needed vacation or complete those renos you’ve been dreaming of.
You may now be in a different financial situation than you were when you first mortgaged your home. Maybe you have received a raise and wish to increase your amortization and monthly payments in order to decrease the amount of interest paid out. On the flip side maybe you have taken on some additional financial obligations and could really use the breathing room an increased amortization could create.