Is Your Mortgage Coming up for Renewal?
Is your mortgage
coming up
for renewal? Don't be too hasty
in just signing the form and sending
it back to the lender. Over 70%
of mortgage
holders do just that,
and what is the usual result - a higher rate and a mortgage
product
that might not be best suited to
your needs. Consider renewing/switching
your mortgage
to another lender,
who will most often give you a better
rate. Many lenders now offer "no
cost or low cost switches",
and it's a smart way to reduce your
interest costs.
Most people are unaware of the legal
effect of switching lenders. When
you renew you are essentially starting
the process again: discharging the
existing mortgage, taking out a
new one, and beginning the whole
payment process, albeit at a lower
principal amount. As such, you should
treat this as just as important
a process as the first time you
arranged the mortgage. Remember
your situation will most likely
have changed since then, and you
may require a different product - with different terms attached - to suit your situation.
In Ontario, a switch of the current
or lower balance requires only a
simple assignment of interest (transfer
of the interest) in the mortgage to be executed by all parties and
registered on title. This assignment
also attaches the specific terms
(payment, interest rate, etc., that
will be in effect) and replaces
those of your existing lending institution.
In other words, even though the
old mortgage is still registered
on title, all those old terms and
conditions registered by your previous
lender will be completely replaced
by those of your new lender under
the assignment of interest.
Annually, mortgage renewal business
accounts for 53% of the total mortgages
in Canada. 70% of renewal customers
simply sign the form their existing
lender sends them and mail it in.
Human nature is to embrace convenience - and the lenders count on it! The
form that you are holding in your
hand from the lender asking you
to renew often has a rate that is
not as competitive as it could be.
Don't let the hassle from the first
time you negotiated your mortgage dictate you just signing the form
and sending it back to the lender - it could well cost you in
the form of higher rates.
A better solution? Shop around,
or get a mortgage broker to do the
work for you. Mortgage brokers offer
the same convenience at no cost
to you, and can choose from a variety
of products and terms to suit your
current situation. Furthermore,
mortgage brokers are becoming a
lot more common in Canada: most
brokers have increased their market
share by 78% in the past two years,
from 14% in 1999 to 25% in 2001.
The smart renewer has already caught
on to the value that mortgage brokers bring to the table.
In summary, don't be too hasty
to sign and renew: check your options
to be certain you are getting the
rate that you want. |
