Regardless of the resolutions that you’ve committed to, sometimes the best way to get moving with new commitments is to start with an easy win!
What is a Mortgage Switch or Mortgage Transfer?
A mortgage switch or transfer program allows you, the borrower to move your current mortgage “as is” ( same amount and amortization) to a new lender. Since mortgage switches and transfers are becoming one of the more popular sources of revenue for some lenders, there are great incentives for you, the borrower, to switch lenders. In addition to a lower rate, the new lender will usually cover legal and discharge fees as an extra incentive to move.
Why would you want to switch your mortgage to a new lender?
Because of two Reasons: either for a better rate or better product.
At renewal time, your lender will typically send you a letter either 6-months or 120 days before your mortgage matures. At that time, you will need to commit to a new term and commit to a new interest rate. Most of the time, the bank’s offer is in the letter they send, and they will ask you to circle your choice and mail it back to them.
But how do you know if your lender is offering you their lowest rate?
Well, this is our job, as Mortgage Brokers, to advise you free of charge, of the other options that are out there currently available to you. We can easily assess your situation, and based on your needs we can offer several solutions that will best work for your situation. And if staying with your current lender is one of them, we’ll tell you that too!
For more information on mortgage switches and transfers, reach out to me! You can email me at email@example.com or call me at 647-893-2535.
What is a Mortgage Renewal? A mortgage renewal is when the current terms of your mortgage come to an end and you sign on for a new mortgage term.
The time is now to spring into action, up to three months ahead of your mortgage renewal deadline...
A great article worth reading!
The Bank of Canada has kept the key interest rate steady and banks have been quietly cutting their rates for fixed and variable mortgage rates. They are also fighting for a shrinking pool of borrowers so it sounds like a great time to renew your mortgage.
Yet many Canadians simply sign their mortgage renewal papers. A 2011 Manulife survey found that almost two out of three Canadians surveyed stayed with their current mortgage provider and didn’t negotiate.
“I don’t know why,” says independent mortgage broker Christopher Molder. “I guess money grows on trees. People are busy, their lives are busy, mortgages aren’t on their mind, the maturity dates comes and goes and they just sign back whatever is offered.”
If you are renewing your mortgage, here are five things to keep in mind before you sign that document.
The posted rate isn’t the best rate
Think of the posted rate as the opening offer in a negotiation or as certified financial planner Shannon Lee Simmons says, “Banks use the posted rate to provide a value proposition to their clients. They often start with the posted rate and then offer discounts to preferred clients. Consumers need to educate themselves and shop around. Even if you get the secret or discounted rate, if you only get rates from one financial institution, you may still be paying a premium compared to other lenders.”
“Canadians really trust Canadian institutions, especially banking institutions,” says Molder. “The banks play on that a little bit. They’ll play dumb, offering the posted rate and leave it up to the borrower to negotiate and play the game.”
Shop around before you negotiate
Do your research before you begin negotiations and always ask for a better rate. “Of course, if a borrower asks, they’ll get a better rate,” says Molder. When it comes to researching mortgage rates, Molder says it’s very easy – just go online and check the rates offered by various lending institutions.
Once you know the rates offered for your preferred mortgage term (fixed or variable) , then talk to your current provider and ask them to provide a competitive offer. “In all cases,” says Molder, “Unless it’s a crazy low interest rate that has been requested, they will come down. They always come down. There’s always room for renegotiation.”
Bank or broker?
The general belief is that brokers can offer a better rate than banks due to their access to multiple lenders. The Bank of Canada survey found that using a broker can result in getting a lower rate. Part of that is due to them getting multiple quotes from various institutions.
Being good and loyal to your bank makes no difference to your rate
Are you paying down your mortgage and cutting years off your amortization? That’s great but it won’t make a difference when renewing your mortgage.
Are you a loyal customer? Have you been with your bank for years and do everything with them? That also doesn’t count when it’s time to renew your mortgage. A 2011 Bank of Canada paper found that loyal customers may not get as good a deal with their bank as they would if they went to a different bank as a new customer. So if you’re looking for a better deal, considering going to a different lending institution.
Check the terms before you sign
The cheapest rate may not be the best rate so always read the small print before you sign. Make sure the rate you choose offers other options such as the ability to pay extra on your mortgage and clearly defines any penalties should you decide to break your mortgage early.
Simmons says, “Start shopping around about four months before renewal – don’t leave until the last moment.”
Renée Sylvestre-Williams, Digital Manager, Community
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