For most Canadians, their biggest monthly expense will be their mortgage. But did you know that over a quarter of Canadians will simply renew their mortgage once their term is up, instead of shopping around to try and find a better deal? We look for sales and discounts on clothes, groceries, gas, and almost everything else that we shop for, so why not our mortgages as well? Here, we provide some helpful tips so that you can get a better rate when you go for a mortgage renewal in Ontario.
Start Looking Early
The general rule of thumb is to start looking for a better rate at least six months before your mortgage term ends. That’s the longest period that lenders will guarantee a discounted rate. In other words, if your current lender’s rates rise, then you’ll be able to rely on the guaranteed rate. Also, if rates were to drop then you will have the opportunity to renegotiate in order to obtain a lower rate.
Perform the Necessary Due Diligence
Before you actually head to your local branch to try and negotiate a better rate, you should shop around to see if you can get a better deal. By doing your homework, you will quickly discover that the different rates actually vary by several percentage points, so taking the time to explore your options can save you thousands in the long run.
Do Not Settle for the Posted Rate
If you simply accept the posted rate, then you may as well hand over your wallet to your lender. If you determine that your present lender has the best mortgage policies, advice, and features, then you should still ask your bank to match the lower rate of competitors. You need to ask your bank for a lower rate because they won’t offer you one. A good negotiating tip is that your bank is much more likely to lower your rate if you are willing to transfer over other investments or accounts, such as your RRSP.
Negotiate on Other Options
Most Canadians will simply focus on their interest rate when trying to lower their rates. However, there are other things that you should factor in when trying to get a lower rate, including but not limited to, the flexibility of the payment schedule, the rate type—variable or fixed—and the amortization period.
In sum, you will need to consider many factors if you want to lower your mortgage rate, and you should never tacitly accept the posted rate that your lender provides. Shop around, ask the right questions, and do your homework in order to get the best possible rate on the market.
To learn more about getting the best rate on your mortgage renewal, call Northwood Mortgage™ at 1-888-495-4825 or contact us here.
