Mortgage renewal

While most Canadians dedicate a lot of time and energy to shopping for their initial mortgage, this is generally not the case when they renew the term of their mortgage.

Mortgage Renewal: Why Shopping Around is Essential

Mortgage renewal is a crucial step in the life of any borrower. It’s a unique opportunity to reassess your financial needs and ensure that your mortgage loan still aligns with your goals. In this process, it’s essential to consider all available options, which involves shopping around to find the best offer. Here’s why it’s crucial to take this step from the outset.

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The Benefits of Shopping Around

Shopping for a new mortgage gives you the opportunity to explore a range of financial products offered by different lenders. This can enable you to secure lower interest rates, more flexible repayment terms, and long-term savings on your mortgage payments.

For example, on average, borrowers who shop around often secure competitive interest rates, sometimes up to 0.5% lower than those who do not. By taking the time to shop around, you maximize your chances of finding the best option for your financial needs. By taking the time to shop around, you maximize your chances of finding the best option for your financial needs.

Hiring a Mortgage Broker

A mortgage broker can play a crucial role in your mortgage renewal process. As market experts, brokers have access to a wide range of lenders and can negotiate favorable terms on your behalf. Their expertise allows you to navigate the renewal process with confidence, knowing that you’re getting the best available options in the market.

Mortgage Renewal or Refinancing?

Before renewing your mortgage, it’s important to determine if you need additional capital for projects such as home renovations, investments, or debt repayment. A mortgage broker can help you explore available financing options, such as mortgage refinancing or home equity lines of credit, to achieve your financial goals.

Staying with Your Current Financial Institution

Staying with your current financial institution may seem convenient, but it doesn’t guarantee that you’ll get the best possible terms. Although you already have an established relationship with them, it’s important to consider other offers available in the market. By staying, you might miss out on opportunities to save on interest rates or benefit from more favorable loan terms.

Example of Potential Savings by Shopping Around

Let’s say you have a mortgage of $250,000 with an interest rate of 3.50%, and you have 20 years left to repay your loan. Without shopping around, you could renew your mortgage at the same rate with your current financial institution.

However, suppose that by shopping around, you find another institution offering you a rate of 3.00% for the same duration and mortgage amount. The difference in interest rates between these two offers is 0.50%.

By using an online mortgage calculator, we can estimate the potential savings:

  • With a rate of 3.50%, your monthly payments would be approximately $1,580.17, and you would end up paying about $379,240.80 in total over the 20-year term.
  • With a rate of 3.00%, your monthly payments would be approximately $1,471.78, and you would end up paying about $353,285.20 in total over the same 20-year term

Comparing these two scenarios, you could save approximately $25,955.60 over the duration of your mortgage by choosing the lower rate you found while shopping around

This difference highlights the importance of shopping around to get the best possible rate when renewing your mortgage, as even a relatively modest difference in rates can result in significant long-term savings.

Take the First Step towards Potential Savings

If you’re considering renewing your mortgage in the coming months, take the first step towards significant potential savings today. Contact me for personalized advice and tailored solutions for your mortgage needs. I’m here to guide you through every step of the process and help you make informed decisions for your financial future.

If your mortgage is not due for renewal in the coming months, fill out the renewal offer form so that I can contact you within 6 months before your mortgage expires.

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