How to get a better rate when you renew with your bank
The most significant monthly payment for most Canadians is their mortgage. And, yet, so many complacently renew their mortgage instead of finding a better deal when their term is up. You should be shopping for a better rate at least half a year before your term is up for renewal. It is the longest period lenders will guarantee a rate. That way, if rates rise, you have your guaranteed rate, and if they drop, you can renegotiate. Here are the steps you should take to ensure you end up with the best rate when your mortgage is up for renewal.
Do Your Homework
Find out what other financial institutions are offering before negotiating for a lower rate. Several websites post current rates from all major banks. You might be surprised to find a difference of a percentage point or two, which can equal thousands of dollars in savings. Even just half a percentage point can save you around $10,000 over 25 years on a $150,000 mortgage.
Never Accept the Posted Rate
If you like your current lender’s mortgage advice, policies, and features, ask them to match their competitor’s rate. You will not get a better rate unless you right out ask for it. They may also be more willing to lower your rate if you agree to transfer investments or accounts like an RRSP.
Negotiate With Other Options
Do not lose sight of all of the variables of your mortgage that affect your monthly payment. The interest rate is a significant factor but so is the rate type (variable or fixed), amortization period, and the flexibility of the payment program. All of these factors combined make up your payment, so it is worth trying to negotiating each one for a better deal.
If after all your research and negotiating, you still cannot get your lender to lower their offer, simply switch. There is no penalty to switching lenders at renewal time so do not stick with the same lender if you find a better deal elsewhere.
Broker a Deal
If you do not have time to dig deep and research every rate available or if you do not like negotiating, instil the experience and knowledge of a mortgage broker. Collin Bruce will do the legwork for you so you can feel assured you are getting the best rate without spending much of your time looking for it. Call him today to book an appointment or find out more.