5 Surefire Methods to Receive a Better Mortgage Rate

When your mortgage is up for renewal, you have a variety of options at your disposal. You can change lenders, you can find ways to pay less every month, or you can do nothing at all. (That last one should never be a consideration for households.)

Typically, when renewal time arrives, you want to get the best mortgage rate possible. You don’t want to be passive and accept what ever is given to you. Remember, saving even just 0.5 percent save you thousands of dollars during your amortization period.

Unsure what to do every few years? Here are five tips to receive better mortgage rates at renewal time:

1. Take a Look at Your Personal Finances

It has been a few years since you signed on the dotted line for your $500,000 mortgage. A lot has changed since then, including your personal finances, either great income or more debt.

Before you automatically renew your mortgage with your lender, you should examine your personal financial situation. This is important because then you will know what you’re working with and what you want to do.

2. Shop Around for the Best Rates

As a knowledgeable and responsible consumer, you’re always on the lookout for the best price, whether it’s for a new television or a new paint of pants. Why should it be different for your mortgage?

Even if you ultimately decide to stick with your mortgage lender, it wouldn’t hurt to scan the mortgage market and see if there are better rates out there.

Moreover, it doesn’t only need to be about rates. You can find out about certain terms and conditions that you don’t already have or are interested in obtaining.

3. Ask, and You Shall Receive – Hopefully

You have likely heard of the expression, “There’s no harm in asking.”

This saying can be applied to your mortgage, too.

Whether you are working with a major financial institution or you’re borrowing from a small, neighbourhood outfit, you can always ask for certain perks, changes, or benefits for your mortgage. If you have been a customer of that branch for years or you have been a superb client, you may get what you want in the end, whether it’s a 0.01 percent reduction or a lower fee.

Despite the reputation of the financial services industry, they can be accommodating from time to time.

4. Consider Using a Mortgage Broker

In the end, if you lack the time, know-how, or negotiating ability, then perhaps you should consider taking advantage of a mortgage broker.

Mortgage brokers typically do all of the work for you, and you don’t need to worry about paying them because they are paid a commission from the lenders. With their experience, skills, and connections, they can oftentimes get you the best mortgage rates.

In fact, according to various studies, borrowers who use a broker can save nearly $2,000 on a $200,000 mortgage over a five-year period. Indeed, that’s nothing to sneeze at.

5. Negotiate Other Aspects of Mortgage

Yes, when renewal time happens, most homeowners will hone in on rates – will they pay 1.98 percent or 2.01 percent?

But perhaps you should look beyond the mortgage rates and concentrate on other factors, such as the amortization period, the type of rate (fixed or variable), flexibility of payment schedules, or a bonus that other lenders are offering.

Let’s be honest: banks want to make money on your $650,000 mortgage, so they will attempt to extend a vast number of goodies to ensure you’re happy and you won’t take your business to another lender.

The Canadian mortgage market is an interesting one at the present time. Mortgage debt is at an all-time high, mortgage rates are beginning to climb, and home values are only inching higher. If you have been fortunate enough to get a down payment, purchase at the right time, and obtain a house in the major markets – Toronto, Vancouver or Montreal – then your only worry is the renewal.

If you heed these tips, then you can save a few loonies and toonies and put that into a new sofa.