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Will I Be Offered a Mortgage Renewal?

If you’re nearing the end of your term, you might be wondering if your lender will offer you a mortgage renewal. Mortgage renewals are a great way to reassess your needs and potentially even get a better rate than the one you have now. But not getting a mortgage renewal means you have to pay your balance in full – so it’s no wonder so many feel anxious towards the end of their term. Inflammatory headlines about the dangers of mortgage renewals floating around the internet certainly don’t help either. 

The good news is you can relax. In Canada, you’re guaranteed a renewal offer from your lender provided you pay your bills on time and don’t have any outstanding balances with Revenue Canada. As long as you’re borrowing from a reputable financial institution, you should be in the clear. 

Where it gets tricky is when you borrow from a private lender. Private lenders aren’t federally regulated, so they have no obligation to offer you a renewal. However, for the vast majority of Canadian borrowers, a renewal offer is guaranteed.

A Bit of Background

There was a time when feeling antsy about your upcoming renewal was actually founded. In 2012, the Office of Superintendent of Financial Services (OSFI) almost made it mandatory for mortgage renewals to be re-underwritten. Thankfully, after some deliberation, they decided against it. The renewal process remains tipped in favour of borrowers.

The Bottom Line

The end of your mortgage term shouldn’t be fraught with uncertainty. If you’re borrowing from one of the banks, rest assured you’ll be offered a mortgage renewal. But don’t take whatever deal they throw at you. Use the opportunity to explore your options and make sure you’re getting the best mortgage product for you.

To do that, you should always consult a mortgage broker. Brokers don’t work for any one bank or credit union. They’re completely impartial experts acting purely in your best interest. Plus, they have access to wholesale pricing on mortgage products that the average person doesn’t. It’s that simple. If you’re not sure where to start, feel free to call my office any time. Just make sure you don’t miss the opportunity of a mortgage renewal to get the best deal possible.

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis: 416-224-0114; steve@canadamortgagenews.ca

Is Common-Sense Lending Making a Comeback?!

Blog Image, Total Net Worth Program, March 2019

I’d like to think the Total Net Worth Program reintroduced by a lender recently is an indication of what’s to come!

I’m excited about this program. It allows borrowers with good net worth to gain access to money. This is old-school lending – nothing new – but it’s a comeback worth celebrating!

Continue reading “Is Common-Sense Lending Making a Comeback?!”

Mortgage renewal opportunities missed.

Banksters

DON’T SIGN THAT RENEWAL AGREEMENT BEFORE SPEAKING WITH YOUR BROKER!

Summer is a great time.  Vacations, time off, no school, sun and fun.  It’s also a time when most of our mortgages come up for renewal.   This year, things are a little different.  The loooong winter is really making us cherish the precious few months of summer.   We want to soak up as much of this warmer weather as possible.

This relaxed mindset appears to be making us easier prey for the BANKS mortgage renewal departments.  Mortgage renewals will typically follow the same process.   You get a renewal offer anywhere from 120 to 30 days prior to maturity.   The BANKS will offer you a rate that may be lower than their posted rate but, it’s much higher than the market rate, and some of us will go back and negotiate, some will call a mortgage broker to get unbiased and true market rates, and some of us will just sign that renewal and send it back in.

In the old days, most of us would just sign and return that renewal to our BANKS.   But that trend started to change over the last 10 years.  Consumers were shopping, calling mortgage brokers and seeking out better products.   Until this summer…. Continue reading “Mortgage renewal opportunities missed.”

Beware of your Bank’s ‘special’ renewal offer…. it could cost you dearly.

Spring is the home buying season.   Summer is the mortgage renewal season.    It’s been that way for as long as I can remember.   Most of us want to move in the summer months when it’s warmer and when kids are out of school.

Once again we’re seeing the BANKs calling borrowers ahead of their actual renewal date.    And once again, they’re counting on you believing they have your best interest at heart.   And once again, I’m here to warn you against signing those offers without having a discussion with your Mortgage Broker.   In most cases, if not all, those offers aren’t that ‘special’.

Here’s just one example of that trust costing this Scotiabank client $3,000.

Just this week, Scotiabank offered one of my clients a renewal at  3.49% for a 5 year fixed rate…Does sound familiar to anyone?  It sounded great to him.   But for some reason, the client didn’t return my calls, my emails or letters about their upcoming renewal.   And I can understand, sometimes life just gets in the way.   Besides, it’s Scotiabank…surely, they’ll have this repeat client’s best interest in mind?   Surely, they will offer him the absolute best rate?

Guess again…  By signing that renewal, and not calling me to verify how competitive the interest rate really was, the client will end up paying around $3,000 more in interest charges over the next 5 years… on a $200,000 mortgage balance.   Today’s best 5 yr fixed rates are hovering around 3.19%.   The real cost could actually end up being more than $3,000 if the client needs to refinance or pay the mortgage off before the 5 years is up.   That’s because Scotiabank, like the rest of the BIG SIX BANKs, uses a prepayment penalty calculation that has the client paying for the original discount given at the time of mortgage funding.    This method of calculating penalties is NOT used by all Lenders but it IS used by all of the BIG SIX BANKs.

But we need to also be aware of other Lenders that are offering those too good to be true deals… If you see lower rates, beware.. there’s probably a catch.   It could be a NO FRILLS mortgage or some sort of hidden exit fee or penalty.

Don’t take any chances….  Call your Mortgage Broker.  One phone call could have saved this client $3,000.   If you don’t have a broker, feel free to call me.  We’re here to help.

Steve Garganis

1 866 812 0516

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