So, your mortgage has come up for renewal.
Many banks handle this differently. Mostly, they will either send you a letter, or give you a phone call shortly before the renewal date. At this point you will be given a renewal offer including interest rate, with a term that usually reflects your current term. Sometimes they will give you several options that you can choose from including potential term, amortization and the rate.
What they are not telling you is that the offer is usually sent with an interest rate higher than what is currently offered on the market to their new business or by other lenders.
This is where you put the pen down! Remember the tv commercial that says “it’s not nice to treat new friends better than old friends”? This is a prime example! The bank or lending institution hopes that you will sign without reading the document or asking questions. Therefore they make more money from your mortgage loan than they deserve! They also purposely send it close enough to renewal time hoping that you will feel there is no time to shop around, so you just sign it.
Allow me to reflect on a situation that happened to my daughter recently, not mortgage related but similar. She had a GIC with one of the big banks, and forgot what the maturity date was. She got a call 3 DAYS before maturity from the bank rep who left a voice mail. My daughter called back and left the rep a voice mail . She was never called back but instead the bank just rolled the GIC into a new GIC with the same terms and their “posted” interest rate. This rate was well below the rate that most banks currently offer for interest payments on a GIC. We then made an appointment at the bank where we requested a better rate, sighting a rate that is being offered by their competitor. Since they were unable to match that rate, we strolled her money over to the competitor and received a better rate of return with better terms and conditions than the original bank. This holds true for mortgages too.
Did you know that you can negotiate your interest rate with your bank at renewal time? Many don’t and if your current lender informed you of the pending renewal early enough, you would have had the time to do so.
Here’s where your friendly mortgage broker, like me, comes in. When you arrange your mortgage through a licensed mortgage agent, you will be notified approx. 6 months prior to the renewal date of your mortgage. Although in most cases we cannot hold an interest rate for you for six months, using my free advise you will have lots of time to ponder your situation and to look at options.
At the 120 day mark, we can then begin to shop your mortgage to our many lenders and financial institutions to get you the best deal possible. There is normally no cost for dealing with a mortgage broker and no obligation, therefore, why not? If staying with your current lender is your best option, you will be informed of that as well.
Mortgage brokers offer their best rates upfront equal to new and old business! Our job is to get you the best deal we can find creating an individualized plan, just for you!
So you see, there is good reason to put that pen down!
Next time, put the pen down, and pick up the phone! Call a mortgage agent, we are here to help!