Your Renewal Rate Is an Opening Offer
A big share of Canadian mortgages comes up for renewal this year, so a lot of people are about to get a letter from their lender with a new rate and a line to sign. A lot of people sign it and move on.
What many people don't realize is that this is not the final offer, though. Renewal is one of the few times you can move your mortgage to another lender without much hassle, so it's worth getting a couple of competing quotes, or letting a broker compare for you. Your current bank will often improve its rate just because you asked, since keeping you is cheaper than losing you.
The math shows that this is worth the phone calls. Take a $500,000 mortgage with 25 years left. At 5.0% the payment is about $2,908 a month. At 4.5% it's about $2,767, so roughly $141 more stays in your pocket every month. Over a five-year term that adds up to about $12,000 less interest paid, and you pay down around $3,500 more of the balance on top of it. Obviously, these numbers will change depending on your mortgage rates. Regardless of your situation, cutting down even 0.1% to 0.2% can save you a huge amount of money over a five-year period.
I rent, so I don't have a renewal of my own coming, but I've talked to some people who weren't aware that you could negotiate your mortgage on renewal.
Anyone here have a renewal coming up this year? Does anyone have experience negotiating mortgage rates?
