We just read an article where Manulife Bank surveyed 1000 respondents and nearly 65% stated they did not check out their mortgage options when their mortgage was up for renewal. Can you believe that is 2/3 of the population? A mortgage is probably the biggest debt you will have in your lifetime, so why would any of us be so cavalier about just accepting the renewal offered by the current lender without checking out the options.
We are amazed that this percentage is so high. It is a common known fact that lenders will typically send out renewal letters at posted rates because they know consumers are too busy to investigate their mortgage options. The banks want (and expect) that many homeowners will just pick a new 5 year term, sign the renewal letter and mail it back to them. Thereby locking themselves into a new and MUCH HIGHER interest rate.
As mortgage brokers with access to over 32 lenders, our job is to ensure our clients get the best deal on their mortgage. This would include a great rate and other terms and conditions of the mortgage.
In most cases it is important to consider all your options, not just the interest rate. A lot of times people renew without completely reviewing the fact that they may want to renovate in a year or two. Planning now for the future will help you determine what mortgage product will best suit your future needs.
For example: perhaps your children will be going off to college in a few years and a home equity line of credit may be a better decision at this time.
Maybe you're looking at renovating your basement or putting a pool in your backyard.....renewing into a 5 year term and doing these changes a year later are not necessarily an effective use of your time and money. It makes sense to sit down with your mortgage broker at renewal time. Take an hour to review your overall situation and then decide what is the best financial choice for you.
Remember, the goal is to be mortgage free in the same amount of time as your original amortization, but to avoid penalties and higher interest rates getting there.
Thanks for reading!
Your London, Ontario Mortgage Brokers at Dominion Lending Centres Forest City Funding FSCO# 10671