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Is your mortgage coming up for renewal?
Is your mortgage coming up for renewal? Don't be too hasty in just signing the form and sending it back to the lender. Over 70% of mortgage holders do just that, and what is the usual result - a higher rate and a mortgage product that might not be best suited to your needs. Consider renewing/switching your mortgage to another lender who will most often give you a better rate. Most lenders now offer "no cost or low cost switches" and it's a smart way to reduce your interest costs.
Most people are unaware of the legal effect of switching lenders. When you renew you are essentially starting the process again - discharging the existing mortgage, taking out a new one, and beginning the whole payment process, albeit at a lower principal amount. As such, you should treat this as just as important a process as the first time you arranged the mortgage. Remember your situation will most likely have changed since then, and you may require a different product with different terms attached to suit your situation.
In Ontario a switch of the current or lower balance requires only a simple, assignment of interest (transfer of the interest) in the mortgage to be executed by all parties and registered on title. This assignment also attaches the specific terms, (payment, interest rate, etc., that will be in effect), and replaces those of your existing lending institution. So even though the old mortgage is still registered on title, all those old terms and conditions registered by your previous lender will be completely replaced by those of your new lender under the assignment of interest.
Annually, mortgage renewal business accounts for 53% of the total mortgages in Canada. 70% of renewal, customers, just sign the form their existing lender sends them, and mail it in. Human nature is to embrace convenience and the lenders count on it. The form that you are holding in your hand from the lender, who did your previous mortgage, has a rate that probably is not as competitive as it could be. Don't let the hassle from the first time you negotiated your mortgage dictate you just signing the form and sending it back to the lender - it will most probably cost you in the form of higher rates.
Get a mortgage broker to do the work for you - the same convenience, at no cost to you and a product and terms that will suit your current situation. Mortgage brokers have increased their market share by 78% in the past two years, from 14% in 1999 to 25% in 2001. The smart renewer has already caught on to the value that mortgage brokers bring to the table. The fact is that it is likely another lender will give you what you want at a rate you want. Let a mortgage broker find that lender for you.
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