Renewal Letters- WAIT!
Wait! Not so fast...
Before you sign any Mortgage Renewal Letters, give your mortgage broker a call!
Most mortgages start out with a 30-year life span and this is referred to as the amortization. During this time, you will have numerous opportunities to renew your term. When you renew your term, you are essentially locking in your interest rate for a short period of time (generally 1-5 years). The interest rates available every time you renew your term are dependent on the current market at the time of renewal.
Even though you may have been placed with your current lender by a member of Oake Mortgage, once that mortgage funds, our name is wiped from the file on the lenders end and in their eyes you are now their client. All we can do is remain your advisor until you are ready to renew or refinance.
When your mortgage is up for renewal, you will receive a letter from your lender stating the current interest rates based on the current market. Although it is very easy to sign that renewal form when it comes in the mail (it is said that approximately 75% of mortgage renewal letters are signed and returned without any discussion), you may be missing out on an opportunity to, at the very least, challenge the rats offered and essentially negotiate something better.
This is when your Mortgage Broker can come in handy! Today it is difficult to understand mortgage rate offerings as lenders have been forced to categorize all of their rates and products (one is for insured, another rate for insurable, another rate for uninsurable and yet another rate for loans that are less than 75% of the homes value).
What we like to do at Oake Mortgage is assess what you have been offered and compare that to what is currently offered in the market by other lenders.
If your lender is offering you a good rate we will let you know and if it is the best option available, we will advise you to renew.
If we feel the rate is not as competitive as what is available in the market, we will not only let you know, we will provide you with a letter that states the rates we can currently access and allow you to present this to your lender to match or exceed what we are able to secure.
If the current lender does not reduce their rate to compete, then we can take you to another lender.
Simply signing that renewal letter is potentially a missed opportunity to see what other mortgage products may be available. It is an easy way for lenders to also take advantage of you as often times that renewal rate is an extra 10 or 20 basis points (sometimes more) than what they are offering to brokers and brand new clients. For reference, a 20 basis point different on a mortgage of $350,000 is approximately $40 a month- not a lot but it can add up over the years.
When your mortgage "term" ends (or matures), it is the perfect time to review your options as most lenders will accept a new mortgage while covering the costs of legal and appraisal, essentially giving you the freedom to move without any cost.
We welcome you to call or e-mail to discuss further and if you would like to share with any friends or family, we would welcome the opportunity to meet with them!