While most Canadians spend a lot of time, and expend a lot of effort, in shopping for an initial mortgage, the same is generally not the case when looking at mortgage term renewals.
A common misperception about mortgage renewal is that it is an automatic process and the best option is to simply renew with your current lender without exploring other options. However, this is not always the case, and it’s important to understand the implications and potential benefits of mortgage renewal.https://findtorontomortgage.com/wp-admin/post-new.php?post_type=page&lang=en
One common misconception is that you are obligated to renew your mortgage with your current lender. In reality, when your mortgage term comes to an end, you have the opportunity to shop around and consider other lenders. This can be a good time to review your financial situation, evaluate your options, and negotiate for better terms, interest rates, or even switch to a different type of mortgage.
Another misconception is that the posted interest rate is the best rate you can get. Many borrowers assume that the rate advertised by their current lender is the most competitive rate available. However, mortgage rates can vary significantly among lenders, and it’s worth exploring different options to find the best rate for your financial situation. Working with a mortgage broker or doing your own research can help you compare rates and negotiate with lenders.
Additionally, some borrowers believe that the renewal process is purely administrative and doesn’t require any additional documentation or financial assessment. While it may be more streamlined compared to the initial mortgage application process, lenders still evaluate your financial situation during renewal. They may consider factors such as your credit score, income stability, and the loan-to-value ratio to determine the terms and conditions of the renewed mortgage.
It’s important to approach mortgage renewal as an opportunity to reassess your financial goals and consider all available options. By doing thorough research, comparing rates, and consulting with professionals, you can make an informed decision that aligns with your needs and potentially save money in the long run.
By omitting proper consideration at the time of renewal, this practice costs Canadian citizens thousands of extra dollars every year. Nearly 60% of borrowers simply sign and send back their renewal that is first offered to them by their lender without ever shopping around for a more favourable interest rate.
Homeowners should never accept the first rate offer from their existing lender. Without any negotiation, simply signing up for the market rate on a renewal is unnecessarily costing the homeowner a lot of money on their mortgage.
Generally it is a good idea to start shopping for a new term between four and six months before your current mortgage term expires. Many lenders send out your renewal letter very close to the time that your term expires and this does not give you ample time to arrange for a mortgage term through a different lender. This means that you need to be tracking your own mortgage term timeframe and know when it is time to start shopping for a good mortgage renewal rate.
Before you ever hear from your lender about renewing your mortgage term, have a licensed mortgage professional shop around for you, you will be amazed at what they can accomplish on your behalf!
Your mortgage is one of your biggest expenses. For this reason it is imperative to find the best interest rates and mortgage terms you possibly can. By shopping around at renewal time you can save substantial amounts of money over the life of your mortgage loan. Don’t be one of the 60% who just simply sign their renewal letter and send it back. Use the services of a licensed Dominion Lending Centres mortgage professional to ensure the lenders compete for your business.