Now’s the time to renew your mortgage! With the Bank of Canada possibly ready to cut rates again in March, and banks cutting fixed and variable mortgage rates, along with the fact that there is a shrinking pool of borrowers, it is the prime time to make a move. With this being said, a number of Canadians still sign their mortgage renewal papers. A 2011 survey found that nearly 2/3 Canadians stayed with their current mortgage and made no moves to renegotiate.
This stat has independent mortgage brokers puzzled. With people being busy and a quick paced life, it seems many people don’t concern themselves with their mortgages. When the maturity date nears, they simply sign their paperwork and move on with their daily lives. For those who are considering renewing their mortgages, here are 5 things you should be aware of.
1. Rates which are posted, aren’t always the best –
You should look at the posted rate at the beginning of your negotiations. This is the rate which companies use as a value proposition to their clients. The posted rate is stated and to preferred customers, discounts are offered from there. You must speak to a professional mortgage broker to help you shop around!
It seems Canadians trust the local institutions and banks play on this fact. They’ll play dumb and simply offer the posted rate, waiting to see if the customer will come back and try to negotiate.
2. Prior to negotiations, do your shopping –
You must research before negotiations, and always be willing to ask for a lower rate. It is as simple as going online and comparing a few of the current rates. Once you know the current going rate, speak to your mortgage company and ask them to reduce your rates. They always come down. Unless you are asking for something absurd, they will come down considerable in most cases.
3. Choose the bank or a broker? –
Many believe brokers offer lower rates because of the multiple lenders. A Bank of Canada survey did find that you can get lower rates with brokers, due to the fact that they get multiple quotes from various institutions.
4. Loyalty makes no difference –
If you are paying your mortgage and cutting years off amortization this is great; however, it has no bearing on your rates. Even if you have been loyal and been with your bank for years, this is irrelevant. A Bank of Canada letter in 2011 found that loyal customers may be getting a worst rate than customers who are new to a bank.
5. Know what you are signing –
Always read the small print. The cheapest rate doesn’t always equate to the best one. Look for additional options such as the ability to pay extra on the mortgage, and one that defines penalties if you don’t abide by the contract.
Don’t wait until the last minute. Contact a Capital Mortgage expert to begin shopping around at least 4 months prior to signing a renewal.