For most Canadians, the biggest monthly expense is their mortgage payment, however, many homeowners opt to automatically renew their mortgage when their term is up. Rather than getting stuck in a mortgage that doesn’t work for you, take the opportunity to shop around. Here are five tips to get the best rate for your next mortgage renewal:
1. Start early!
Many mortgage holders make the mistake of starting their search for a new rate too close to the end of their term. This limits your options considerably and can sometimes leave you paying even more than before. For the best results, start looking four to six months before the end of your term, since this is the maximum amount of time that most lenders will guarantee a rate. If your current lender raises your rate, you have an option to fall back on, and if they drop it, you can use your options to negotiate a better rate.
2. Advocate for yourself
If you find a better rate, don’t be afraid to negotiate with your bank. If you don’t ask for a change in your monthly mortgage payment, the banks will happily charge you the same amount that you’ve been paying. Banks will also sometimes be more accommodating in negotiations if you’re willing to transfer accounts and investments to them (e.g. an RRSP).
3. Focus on all negotiable options
When looking for a new mortgage rate, many homebuyers get stuck in the trap of focusing solely on their interest rate. Other factors, such amortization period, rate type (fixed versus variable), and payment schedules can save you time and money down the line. When comparing mortgage options, ensure you’re looking at all these aspects to find the best mortgage renewal plan for you.
4. Do your research
Before even starting negotiations with your bank, do your homework on all the available rates that other lenders are offering. The more options you find, the more leverage you will have in negotiating your rate with a bank. Ensuring you are well-informed in considering mortgage options is a great way to find a better rate without the hassle of switching lenders.
5. Use a mortgage broker!
If you are inexperienced in the field of mortgage options, or simply don’t have the time to research and negotiate with various lenders, consider working with a trustworthy mortgage broker. A broker can do the hard work of research and negotiation, saving you money on your mortgage renewal. According to the Bank of Canada, homebuyers using a mortgage broker often pay less than those without.
Whether you’re renewing a mortgage or looking into getting your first mortgage, get in touch with your local Port Coquitlam mortgage broker, Milka Lukacevic.