Mortgage renewal time is a very important time. I see too many people though treating it too lightly.
Most financial institutions will not touch base with you until about 30-45 days from your renewal date which does not give you a ton of time to figure out what to do. Especially in our busy lives.
I look at every clients renewal about 4 months prior as this is the magic number of being able to hold a rate if market changes are occurring.
What I see a lot of people do is just sign on the dotted line and take what the lender is offering as ‘it’s the easiest thing to do’. However, this could be the worst thing to do especially without consulting me. Lenders, and more common in banks and credit unions, will try to see if you will sign on the dotted line with a rate that is not at market. Sometimes much higher.
Some people are even asking other financial institutions, banks etc for their best rates forgetting that what I do is shop around and have the know of where all lenders are currently at. As a consumer you may only call the banks to ask what their rates are when in fact there are a number of non-bank lenders that you can go to as well, however, only through a broker. So you wouldn’t know who exactly to call.
This biggest thing to keep in mind is mortgages are NOT solely based on rate and rate alone. There is much more behind the rate.
I’ve seen some people where they’ve been set up in a non-bank lender, come up for renewal and switch out to go to a bank for a mere .10% difference. Not taking into consideration now that they are in a banks product that comes with a penalty to break your mortgage anywhere from 3-5 times higher than a non bank, a registered collateral charge (which on your next renewal, if you make it that far and aren’t charge the exuberant penalty, will come with a cost of $1,000-1,200 to change out in case some other lender has a better rate).
An example on a $300,000 mortgage. People will change for .10% so I’ll do a .20% difference in rate to show you. Over 60 months the difference in interest is a mere $2,710. However, now let’s say on renewal your current lender does not offer you the best rates and you need to move. This move will cost you up to $1,200 or more to do so. Plus the headaches of going back to a lawyer etc. The difference is only $25/m for piece of mind.
Now let’s say you break that mortgage 3 years in (and believe me there are MANY reasons one is to break their mortgage). The penalty at a big bank on a $300k balance could be around $13,000 where the non-bank is at $2,300. So almost $11,000 difference. Oh but don’t worry right, you saved $1,696 in interest over the last 3 years by switching for that .20% difference. Or LOST $9,000!
Please remember, that as an independent mortgage broker my interests lie in you and no one else. Saving you money and making sure you pay down the mortgage in the fastest way possible is my goal. Financial institutions interests lie in themselves and how much money they can make.
I know sometimes moving, if needed, can seem like a lot of work, however, with the most costly thing in your life don’t you think having the best, made for you product, is the most important factor?
I live and breath mortgages every day of my life and at the time of this writing I’m completing 11 years of doing so. I’d like to think I’m pretty knowledgeable in this field and have a very good understanding of every lenders products and policies.
Please, let me do the work for you. It doesn’t cost you anything to ask or to use my services!