Mortgage Renewals: Don't Just Sign Them!
Renewals account for 53% of all residential mortgage business in Canada. Yet 70% of mortgage holders simply sign and return their lender's renewal form. Bad, bad, bad!
Using a mortgage planner for renewals makes more sense. That's because interest rates in lenders' renewal offers are almost always higher than a mortgage planner can find you elsewhere. You'll often get better privileges with a different lender as well.
But why are renewal offers so bad? The Nanaimo Bulletin says it's because "human nature is to embrace convenience and the lenders count on it."
Switching lenders is nothing to fear though. In fact, it's often very inexpensive. You usually have to pay your current lender's discharge fee of $250-$300; but, if you save a ton of interest and get better perks--who cares?
One last note. This story applies especially to the big banks. In the case of non-bank lenders, a few of them actually offer pretty decent renewal rates.
Stats Source: Nanaimo Bulletin
Often your new lender will offer to cover your fees (transfer fees) to switch
I agree, I was on Desjardins mortgage (through broker), and their auto-renewal rate was very decent
Posted by: NeverStopBuying.com | February 06, 2008 at 05:06 PM
I think the Nanaimo Bulliten "hit the nail on the head" with that quote. People are generally lazy!!
It doesn't surprise me that a lender would draw you in with a nice low rate, and then offer up something mediocer on renewal. Why not, if you sign, they have made more monney! It's all business.
Posted by: brew99 | February 06, 2008 at 07:21 PM