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Shop Around Before You Renew Your Mortgage

Almost time to renew your mortgage? Follow these tips to secure a better deal.

Shop before you review

A big share of the average homeowners’ income goes towards mortgage payments. Yet, when it comes to renewing a mortgage loan, four out of five of us automatically renew with the same lender. Many do so without even negotiating the rate.

While this might be more convenient, in the long term, homeowners who automatically renew their mortgage are sacrificing thousands of dollars in savings.

Not convinced? Let's do the math...

Take for instance a $150,000 mortgage with a 25-year amortization.

A 2.75% interest rate equates to roughly $57,000 in interest payments over 25 years.

If the homeowner had secured a 2.25% interest rate, they’d pay $46,000 in interest.

By finding a rate just half a percent lower, this homeowner has saved about $11,000. That’s a big reward for a little homework.

Quick Tip: Use our handy Mortgage Payment Calculator to see the impact of varying interest rates on your mortgage.

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How to find lower mortgage rates

If you want to find the lowest available mortgage rates, start shopping around at least four months before your current term is up for renewal. When the time comes to speak with your lender, you’ll be more informed and not feel pressured into make a quick decision. You’ll also be able to lock in a rate earlier, which limits the risk of rates climbing.

The good news is that the best place to search for mortgage rates is right here! By compiling and comparing thousands of mortgage rates, Rates.ca makes it easy for homeowners to find the best current mortgage offers in seconds.

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Changing lenders is not always the best option, but it’s always worth negotiating

Whether you decide to switch over to another mortgage lender or stay with your current one, you should never automatically accept the default rate offered. Mortgage lenders expect you to negotiate. If the only thing about your current lender that you're dissatisfied with is the rate, find a lower rate from a competitor, and ask your lender to match it. They might say no, but often they’ll say yes!

Sticking with the same lender is obviously the easiest option. And, in an ideal world, your lender would reward your loyalty with a rate near the market’s best. That would make it an easy decision, but it doesn’t happen that often. Lenders know you don’t want the hassle of re-applying all over again so they typically build in a rate premium for the convenience of renewing.

Other things to consider when renewing your mortgage

While the interest rate is the most important component of a mortgage, there are other variables that can affect how much you ultimately pay. When discussing your new agreement, be sure to ask about the rate type, and payment schedule. If you can afford it and don’t have higher interest debt elsewhere, more frequent mortgage payments can save you a substantial amount of interest in the end.

If you find the process confusing, or are hesitant to negotiate with your provider, you can always retain a mortgage broker to represent you. Mortgage broker services usually entail no out-of-pocket fees, so there's little downside in asking for professional help.

Find a mortgage broker

Engaging a mortgage broker before renewing can help you make a better decision. Mortgage brokers are an excellent source of information for deals specific to your area, contract terms, and their services require no out-of-pocket fees if you are well qualified.

Here at RATESDOTCA, we compare rates from the best Canadian mortgage brokers, major banks and dozens of smaller competitors.

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