Top Things To Consider Before Renewing Your Mortgage

Interest rates are steady and banks are cutting their rates. It sounds a good time for renewing mortgage. However, don’t make the same mistakes others have made. Don’t just simply sign the renewal papers or stay with your current mortgage broker.

Even if you are busy and don’t have your mortgage always in your mind, don’t just sign what is offered. Otherwise, you might compromise your finances. Read the fine print and think of the following.


Posted Rates Aren’t The Best Rates


Your current provider might not be telling you about the nature of posted rates. Posted mortgage rates are actually value propositions from the bank. What you have on your side is the power to negotiate. Banks give these propositions and then later, they will offer discounts to their favorite clients.


In other words, you need to shop around and not just settle with what has been offered to you. Even if you get a discounted rate from your provider, get to know the rates from other financial institutions as well. You may still be paying a premium with your provider’s discounted rate compared to the rates of other lenders.


The nice thing about posted rates is they give consumers the chance to decide for themselves. So, negotiate and play the game well. There is always a huge room for renegotiation.

Changing Your Provider


Aside from the hunt for the best rate, there may be other benefits you can get from changing your provider. Canadian banks say that cutting a few basis points can bring in huge rewards given that borrowings are on a large scale and the term to pay is long.


If you are someone who still has $250,000 left to pay – payable in 24 years at 5%. A reduction of 0.3% can make you save about $50 a month. Over the life of your mortgage, you will be able to save about $14500.


If your current provider is a bank, staying loyal with them will not lower your rates. Even if you have been dealing with that bank for years now or you have been making good with your payments, that still will not count as a good basis for the bank to lower your rates unless you negotiate with them.


So do your research, shop around and if it will do your finances better, make a switch. Remember that, as of late, banks are trying to win low-risk customers and are having a more difficult time competing with brokers.


Give Enough Time To Assess The Terms


It does make sense to read the fine print of the contract, if your purpose is to know the advantages it can give you. Check for the provision that tells about the possibility of paying more than the required monthly payments. How much extra money you are allowed to pay? What are the penalties?


Your broker might be mum about these provisions because they want to make sure that they get the maximum benefit out of every single deal that they have. From your side, you are just out to protect your finances. Make sure you are educated enough to understand and interpret the provisions contained in your contract.