With inflation still well above the Bank of Canada’s target, it’s only normal for mortgage holders to have some questions and concerns about their renewal. For many, the first question is: how can I get a better interest rate?
Rebecca Awram, mortgage advisor at DLC Canadian Mortgage Experts, weighs in on what you should keep in mind if your mortgage is up for renewal.
Do your research and compare mortgage conditions
While mortgage rates are the first thing that comes to mind when it’s time to renew your term, Awram says it’s just as important to know what else separates one lender from another and one broker from another.
“No one phones you and says, ‘Hey, who has the best porting policy?’ or ‘Hey, who has the best penalty calculation?’ Often, consumers don't know what they don't know,” says Awram. “But, hopefully, they leave a meaty conversation with a broker with a better understanding of those things.”
Knowing the landscape, including what provisions you should be considering and what options are open to you, will allow you to have a deeper conversation with your broker and contextualize why they may suggest one rate and term over another. The more in-depth a conversation you have, the better off you’ll be as you negotiate the right conditions for the right rate. Afterall, you can’t negotiate if you don’t know the advantages of other mortgage options.
Get mortgage negotiations in writing and ask the right questions
No matter who you are, you’ve probably left a really productive meeting and had at least some of the information you gained escape your mind shortly after. Awram says that’s why she opts for email, so that both her and the client can come back to the information shared and be able to connect those details to real world impacts, like your monthly mortgage payment in relation to a fixed versus a variable interest rate over time.
“Discussions are great, but I do like to put things in writing so that people can take a second, look at it, do some math, and dollarize it,” says Awram. “You can talk about rates, but they're fairly meaningless to people unless they see what that means in terms of payment.”
Being able to initiate the big picture questions, like whether someone has had an interruption in their main income stream or if a small second mortgage might make sense, is a key skill for mortgage brokers. One that Awram says should be a requirement.
“If someone isn't asking probing questions, and then trying to get more information, then that's not [a broker] you should be working with,” says Awram.
Having the information you discussed with your broker in writing also allows you to refer back to it if you decide to go and speak with another broker.
Compare mortgage rates from different lenders
If your mortgage renewal is causing you anxiety, renewing with your existing lending can have the fewest hurdles. However, Awram says at the end of the day, comparing mortgage rates when you renew your term is the way to go. Doing so can also give you an upper hand when negotiating rates with other lenders.
“No one should be making this decision on their own just because they're going down a rabbit hole online one night and looking at private mortgage sites,” says Awram. “Get a mortgage broker to lay out all your options for you.”
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