Here are the top things you can do to get the best mortgage renewal.
1. Start early
When being proactive instead of reactive, you can see if there is anything on your credit score or lifestyle that can be modified to ensure you are positioned for the best renewal. The most options will be available in the last year of your mortgage. For example, there can be an inaccuracy in your credit report or you may be considering an income/job change that would impact options.
2. Don’t just sign the renewal offer
Lenders can change terms of your mortgage, and the renewal you are signing can cost up to four per cent of your equity if you are with the wrong lender for your current life stage.
3. Seek the best terms
The terms are most important and with all terms, moving or selling is the only reason most people think they would ever break a mortgage; this is simply not the case. A change in the interest rate market, divorce, health, job change, investment opportunity and many other reasons contribute to a future modification being beneficial.
4. Review lender history
The lender can have a higher prime than anyone because they know the cost to leave outweighs staying the course. Lenders are smart with their calculated risks, and this is not something they have an obligation to disclose.
5. Don’t be a victim
Remember, your lender has a bias. Their job is to handcuff you so they can make as much profit off you as possible.
6. Don’t shop by yourself
Do not shop each lender on your own; it takes points off of your credit score. All lenders have different rates based on your score and you want to position yourself to get the best. By using a mortgage professional, they can shop multiple lenders, protecting your credit using only one application, while the rate variation can be on average a half a percent.
7. Beware of online rates
Any monkey can post a rate online and you can drive yourself crazy looking at something that does not exist. In today’s complex mortgage market there are significantly different rates based on insured versus uninsured mortgages, switch versus refinance, purchase or renewal, principal residence versus rental, salary or self-employed, 600 credit score or 700 credit score, amortization of 25 years to 30 years, type of property, condo versus house, and leased land or freehold.
Variations can mean a difference in the thousands of dollars. Like diagnosing a medical condition, you can’t go online; you have to put in the appropriate application and supporting documents to verify which options are available that will result in the lowest borrowing cost.
Cait Holmes is a mortgage broker in the qathet region.
