Automatically renewing your mortgage is simple and convenient but not always the best option. Read on to learn about the advantages of working with lenders other than your bank and why you shouldn’t take your bank’s mortgage renewal.
What does it mean to renew your mortgage?
When you get a mortgage with a lender your mortgage commitment is for a specified period of time. Typically, ranging from a few months to five years or longer. The average amortization for a mortgage in Ontario is 25 years, so if you keep your terms at five years you will have 5 terms in your mortgage (five opportunities to renegotiate your rate).
When your mortgage term is coming to an end this is a great time to look at your financial needs. There are different mortgage products for all situations.
My mortgage lender just sent me my renewal rate, now what?
Most institutions will automatically renew your mortgage at a higher rate than you previously got. For example, if your rate during your first term was 2.4% don’t be surprised if you get a letter that shows a 3% rate or higher. The bonus is that you don’t have to renew your mortgage with the same institution. You can bring your paperwork to your mortgage agent or broker and have them shop around. Did you know Ardent Mortgages works with over 50 banks and lenders?.
With a renewal letter already sent to you it makes it too easy for you to renew, and most people don’t take advantage of the current market rates. Automatically renewing is much more convenient but it could also cost you thousands of dollars in interest over the length of your mortgage. Five years ago, in 2015, low mortgage rates were approximately 2.85% – in 2020 mortgage rates were as low as 1.6%!
The benefit of working with Ardent Mortgages is that we offer a free no-obligation consultation. Bring your renewal or purchase rate quote to us to see if we can get you a product that meets your goals.