When it comes to your mortgage renewal, most people are unaware of how your lender treats your renewal versus if you are purchasing a property. Normally when you go to purchase a property your lender is happy to guarantee a rate for you for 3 – 4 months. This gives you the chance to obtain lower rates if they drop but also protects you if rates rise.
However, for some reason when you have a mortgage renewal they treat you differently. Normally they will contact you several months prior to your mortgage renewal and they will offer to renew the mortgage for you on the spot. The lender will usually offer you some sort of rate that is not their bottom line rate and will let you know the rate is only valid for a day or two and will then not be available after this time. This may or may not be in your best interest. Being aware of the following top mistakes can save you thousands over the time that you have a mortgage!
First of all, they will almost never offer you their bottom rate and will almost always make you go shopping for it. Second of all, they are usually not telling the truth about the rate being available for a day or two. Unless the rates change, the rate will continue to be available onward from that date.
Even knowing this information, most people still do not know the #1 mistake they are making when renewing their mortgage! The #1 mistake you can make on your renewal is locking in at the rate your lender gives you on a certain date and not giving yourself the ability to shop around for the best deal for at least a 4 month period.
The most successful way to negotiate your mortgage renewal is not to early renew immediately when given the chance. The best way to negotiate your mortgage renewal, whether with your current lender or another lender, is to get a rate secured for 4 months. First of all, this gives you the option to get the best rate secured today, have it held for you for the next 4 months and doesn’t force you to lock in immediately. Most important though is that during this 4 month period you are able to monitor rates and get the lowest rate possible over the 4 months. So rather than locking in to what you are offered on one particular day, you get the lowest rate over 4 months. Why wouldn’t you want to have a chance to see what rates are like over a 4 month period rather than 1 or 2 days? It is a no lose situation for you. You will get the best possible rate and can save thousands of dollars.
We have the ability to obtain a 4 month rate guarantee, if necessary, at no cost to you. Just like when you negotiated your mortgage when you first bought or refinanced your place, it is just as important to look at your options closely for each renewal. We have had clients tell us that they’re not concerned about saving a few thousand dollars and it’s “just easier to renew right away”. Many of you will have at least 5 to 6 mortgage renewals, if not more, throughout your life and settling for higher rates each time can easily cost you many years of extra payments and interest over your lifetime. Being aware of these top mistakes can save you thousands over the time that you have a mortgage!
We are here to help you make the best informed decision for your renewal and would like to help you secure the best rate possible with your current lender or another lender so that you can pay off your mortgage as quickly as possible. Give us a quick call and you can make a better informed decision about your mortgage renewal!
If you need any advice on your personal situation please contact our office at 604-556-3893 or email at [email protected]
For more information on our mortgage products and your preferred Abbotsford Mortgage Broker please visit our website at www.ymscanada.ca.