My mortgage is up for renewal – what are my options?

If you have just received your mortgage renewal statement, you may be in shock when you notice the  drastic increase in the mortgage rates being offered by lenders.  The 5-year fixed mortgage rate has jumped to almost 6% and is higher with some lenders.  Even though the Bank of Canada has recently lowered its prime rate in October 2008, there is still a significant difference between the mortgage rates that you might have received 3 to 5 years ago compared with mortgage rates today.   Even a variable rate mortgage, which was recently available at discounts of 0.85% to 1% below prime rate, is no longer available and will not likely return in this market.  Today’s adjustable rate mortgage or variable rate mortgage is available at around prime rate PLUS 1%.     

 

When you receive your mortgage renewal statement, it is important for you to know that you can always take your mortgage business to another lender and there is no “penalty” as long as you are not breaking your mortgage term prematurely.  However, there are costs associated with just switching mortgage lenders, especially if you go shopping for a mortgage on your own.    Here are the typical costs associated with just switching mortgage lenders:   

 

1) Appraisal Fee:  you may have to pay the cost of an appraisal when you switch to a new lender.  Any new lender needs to know what the fair market value is, of your home, before they will agree to advance mortgage funds on it. Appraisal fees can be anywhere from $150 – $350 depending on the square footage of your home and these are always ordered by the lender so do not go out and hire an appraiser yourself.  

 

2) Discharge Statement Fee:  you will have to pay the cost that your lender will charge to prepare a discharge statement for your mortgage.  Every bank charges a discharge fee if you leave them at the end of your mortgage term. The discharge statement fee can range from $150 – $300, depending on your lender.       

 

3) Legal Fees – a new mortgage will have to be registered and you will need a lawyer to do this for you. The cost to register a new mortgage can be anywhere from $600 – $1,500 or more, depending on what you are having done.

 

Now typically, when you get a renewal notice from your lender (before your term is ending) and you do not like what you are being offered on renewal, let me recommend a couple of options:  1) you shop the rates yourself and go back to your lender and negotiate the rate with them directly; or 2) you call me and I will shop the mortgage rates out on the market for you. Because I deal with over 40 lenders, I can let you know if you are being offered the best deal. Once I find you a better mortgage rate, you can simply ignore your lender’s renewal “offer” and I can set up a new mortgage for you to take effect on your mortgage expiry date……it is that simple.  I help clients switch their mortgages to a new lender all the time and it is a painless process.

 

Now if you are concerned about the “cost of switching”, I have a GREAT product just for that!  One of my lenders will pay ALL of the costs typically associated with switching your mortgage:

 

1) your appraisal fee is paid;

2) the discharge statement fee is paid;

3) and the legal fees are covered.

 

So essentially, it is a NO COST switch that allows you to move your business without costing you a dime.  Also, since I have the ability to negotiate discounts on your mortgage rate too, I can almost always guarantee a better rate than what your own bank is offering.  Please contact me about 4 months prior to your renewal date, and I promise to give you the best service!

     

This blog was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario.  Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.

 

You can contact Elizabeth directly by phone at (905) 510-5785,  by email at eblair@mortgageedge.ca  or you visit her website at:    http://www.missmortgage.ca 

 

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca