renew your mortgage with your eyes open - ingrid bjel mcgaughey - toronto mortgage broker

Don’t Renew With Your Eyes Closed

renew your mortgage with your eyes open - ingrid bjel mcgaughey - toronto mortgage brokerDon’t renew your mortgage with your eyes closed!

When your mortgage comes up for renewal, your lender will send you a letter suggesting you renew at their current offer. If you renew your mortgage on their terms, without shopping around, you’ll be renewing with your eyes closed! This is your moment of opportunity to negotiate the best possible deal, either with your current lender or with a new one. Do you know if the same lender remains your best choice? If you don’t, you aren’t alone.

65% don’t compare mortgage products at renewal

At the end of 2011, Manulife Bank of Canada released the results of their latest consumer debt survey. They found that two-thirds of homeowners (65 per cent) did not compare products from several different lenders to make sure they were getting the best deal the last time their mortgage came up for renewal. Twenty per cent stayed with their current lender and did not negotiate, while 45 per cent stayed and negotiated but did not shop the market. Interestingly, the youngest age group surveyed (30-39) were the most likely to shop around (41 per cent) but also the most likely to stay with their current lender and not negotiate (24 per cent). This age group is in the most hectic period of balancing work and children, which often causes things to be left to the last minute, and it ends up being easier to follow the path of least resistance.

Renew at a lower rate and save money!

You could save a considerable amount of money if you renew at a lower rate. A half percent difference on a $225,000 mortgage with a 20 year amortization can mean over $5,200 in interest savings over five years. Wouldn’t it be better to put that amount towards reducing your mortgage principal?

You also need to consider that your mortgage needs may have changed. This may be a good time to roll your high-interest credit cards and other debt into your mortgage to get one lower payment, boost your cash flow and save on interest costs. Or you may want to take some equity out for renovations, a second property or for investing. Using your home equity, rather than your credit cards, to pay for major purchases can also be a smart move. If any of this is something you would like to explore further, take a look at my other pages under the “Refinance” tab and/or the “Purchase – Investment Property” tab, for more details.

Want to renew with your eyes open?

If a renewal is in your financial future, bring us your renewal notice at least four months prior to your renewal date. There are some great options out there; we’ll help you look around!

Want to get better informed about your mortgage?

Check out more about the differences in how lenders treat mortgage payout penalties here.

To get more info on the choices you have with mortgage lenders, click here.  Most Canadians don’t realize how many choices they have!

For any other questions, just pop your search term into the site search engine, and chances are I’ve written an article about it.  If not, please send me your suggestions – I’m always looking for interesting ideas to include in my blog.


Photo credit: [c] Stuart Miles for

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