Mortgage renewal strategy Be proactive
Mortgage renewal can be an easy task. All that’s typically required is signing the renewal notice your current lender sends you 30 days before your mortgage maturity date. But by going this route you may miss a chance to improve your finances.
Generally, with the mailed renewal slip, mortgage providers only offer their existing customers a discount from their posted rate and the same terms as before. But that rate may not necessarily be the lowest possible rate you can get and the terms you agreed to five years ago may not suit your current financial and life situation. It’s in your best interest to renegotiate your mortgage and potentially save a lot of money. Here’s a strategy that may get you a better deal on your mortgage renewal
1. Set up a timetable and choose your approach – If you are planning to seek the best possible rate and/or different terms and conditions, start the process early by contacting your lender three months before your maturity date. If you can’t negotiate a better offer with your current lender, you’ll have plenty of time to shop around for another lender. You may want to recruit a mortgage broker in this search. A mortgage broker can access your credit
report and find a list of lenders who will work with you and the best rates they can offer if you choose to switch.
You can also ask your mortgage broker to put a hold on another lender’s favorable rate and leverage that to see if your current lender can match it or do better.
2. Negotiate a better offer – Armed with competitive rates offered to you from other lenders puts you in a strong position to negotiate. Remember, your lender is motivated to keep your business. You simply ask your current lender for a lower rate, as an existing, long-term customer with a good credit rating and a spotless payment record. If your lender’s offer is not to your satisfaction, you can switch to a better one. But, be aware that switching lenders sometimes means you have to go through another mortgage application process and you may incur some costs.
Following the above strategy can save you substantial amount of money over the life of your mortgage.