Mortgage Renewals

The first thing you should do when you get your mortgage renewal documents in the mail from your current lender is call us.  Mortgage renewals should be treated with as much decision as when you originally took the mortgage.  Banks thrive on renewal customers, they already have you as a customer, they don’t have to pay a staff member or broker to keep you (because they don’t have to do any paperwork, other than send you the two page renewal letter) and they don’t have to hire any additional staff to assure your ongoing service (there likely has not been any true level of service anyways).  And (this is the big one) they will almost never offer you the best rate they could.  Historically a large percentage of Canadian mortgage customers accept the renewal terms from their current lender for one of two reasons:  1)  it is very convenient, 2) they feel as though the lender must have their best interests in mind.  In the case of reason #1 they are correct, it is extremely convenient to read the mail, sign on the dotted line and mail it back to the lender.  We think that what we are about to show you regarding reason #2 will make you think twice about reason #1.

Nice lender…but not nice enough

It would be a generality to suggest that all lenders do not have your best interests at heart, that simply isn’t true.  Some of the lenders out there do not have posted rates (these are the significantly higher rates offered by some lenders as their “best” rates), but rather only offer discounted rates.  Depending on the economical factors, lender cost of borrowing, and many others these discounted rates are often 1 to 1.5% lower than posted rates.   These lenders do a very good job looking out for your best interests and are likely worthy of your continued business.  That still does not mean that you are getting the best option for your financing.  You see the lender you are currently with may offer you their posted rate (not a good option) or they may be one of the “nice lenders” offering you their discounted rate (better option), however their discounted rate may still be significantly higher than a lender that we may be able to switch you to.

If you had $250 000 owing on your current mortgage that is now five years into the original 35 year amortization (which means you would now have 30 years remaining) your Axis Mortgage planner may be able to save you $3 038.14 over the next five years of your mortgage by allowing us to move you to a lender whose rate is ¼% lower than your lender is offering.   It is not uncommon to see this scenario.  Many of the lenders who are the “nice lenders” are still ¼% higher (or more) than some of the competitors we can access for you.  On average it will take 3 hours of your time to switch lenders.  So think of it this way: we want to hire you for 3 hours and we are going to pay you over $1000 per hour… pretty good part time job, don’t you think!

The truth about the not so nice lenders

So we know that some of the lenders are offering a very competitive, and in some cases your best interest rate at renewal time, but these situations are few and far between.  Most lenders are offering the posted rate or close to it.  The following example really needs no convincing.
That same $250 000 mortgage offered at a posted rate will yield a significantly higher monthly payment.  Over the 60 months of your new term, on interest rate alone, your savings will be more than $15 000.  Now we are paying you $5 000 per hour!

At Axis Mortgage we track historical interest rates prepared by the Bank of Canada.  In 2012 the average Canadian Bank mortgage holder paid 1.24% higher rate than our clients.  Many banks will be competitive to earn your business, but the simple fact remains, in order for the average mortgage holder to end up paying 1.24% more the bank clearly does not remain loyal or competitive.  Don’t you think you deserve more!

It is FREE

You may be thinking this is too good to be true, but it is in-fact better than good and is absolutely true.  In almost all cases the new lender that has earned your business will pay for any appraisal costs, legal costs or transfer costs.  You will be required to provide the required documents to the mortgage planner and lender, however you will not be charged for any expenses.  Now if the $15 000 savings wasn’t incentive enough, this has to seal the deal.  Please do your self a huge favor and call us before you just settle for the convenience of signing those documents.