Renewing Your Mortgage?

When a mortgage term is about to mature, many of the big banks in Canada will send a renewal notice by mail one or two months prior to the expiration. At this time, the banks tend to take advantage of people’s busy schedules, lack of desire to go through tons of paperwork and shop around, or simply the lack of knowledge about the numerous options available. These big banks know that it’s a hassle to change your mortgage terms – and they hope the majority of mortgage holders will simply sign the renewal documents and carry on for another term without so much as a question.

The Numbers

Manulife Financial surveyed 1,000 Canadian homeowners between the ages of 30 to 59. Among
respondents with a mortgage, two-thirds (65%) did not compare mortgages from more than one lender when they last renewed.

More Specifically

• 20% stayed with their current lender after maturity and did not negotiate
• 45% stayed with their current lender and tried to negotiate a good deal, but did not shop around
• 35% compared mortgages from several lenders and chose the best overall lender and product.

The youngest group (ages 30-39) was most likely to shop around (41%), but was also most likely to accept their current lender’s offer without negotiating (24%).

Banks generally don’t take the time to go through a client’s current financials to see if shortening the amortization might be beneficial, for example. One of the most disadvantageous elements with the largest financial impact is banks tend to offer their posted rate with very little or no discount on these easy-to-sign renewal forms.

The MortgageTree Broker Advantage

Our ​MortgageTree brokerage services allow those of you who would like to renew your mortgage various options that might make much more sense for your situation.

We now know that two thirds of Canadians sign their renewal without researching what the competition has to offer. This is the exact opposite of the homework that’s generally done at the onset stage of searching for a mortgage, at which point most Canadians spend a lot of time and expend a lot of effort shopping around. By omitting the same consideration at the time of renewal, thousands of your hard earned dollars are lost every year.

You should never accept the first rate offer from your existing lender.

Timing Is Everything

A good rule of thumb is 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 maturity date in hopes that the lack of time to research and explore will result in a quick renewal with them. This means that you need to be aware of your own mortgage maturity date and know when it’s time to start shopping for a better renewal rate or other conditions.

Before you even hear from your lender about renewing your mortgage term, it’s a great idea to have a licensed mortgage professional shop around for you and handle all the legwork. More often than not you’ll be amazed by what they can accomplish with your best interests in mind!

Your mortgage is one of the biggest expenses of your lifetime. Let a ​MortgageTree specialist provide you with the most competitive rate and term, while ensuring all layers of your financial situation have been considered to get the absolute best product for you.