How to get a better rate when renewing your mortgage. Everyone who needs a mortgage wants the best rate. However a good rate is only one way to save money on a mortgage. Adjusting payment schedules, creating flexibility on the amortization or paying-out consumer debt are cost-saving strategies often overlooked by most people.
Focusing only on the mortgage rate and finding a rate that’s “too-good-to-be-true”, often leaves you paying more fees or costs in the future.
Banks and brokers work mortgage interest rates differently. The chartered banks have posted and discounted rates. If you decide to work with a bank, then the rate negotiation is up to you. It’s almost like buying a used car and negotiating the price of the car. You’re never really sure what the best price is. Negotiating your mortgage with a bank may be as frustrating as buying a used car and that’s where a mortgage broker will help.
If you trust your mortgage broker to do their job, they’ll find a good mortgage that combines a low rate, while still giving you the features you need to save money and meet your financial goals.
I always keep my pulse on the mortgage market and check www.cannex.com to ensure my rates are competitive. Here are a few tips when renegotiating your own mortgage:
- Ask your mortgage professional what the main differences are between the variable (VRM) and fixed rate mortgage they are recommending. A VRM mortgage often has a lower rate, but you may end up paying a higher rate in the long run.
- How are the penalties calculated? Banks often have posted and discounted rates and the penalties are calculated on the mortgage based on the posted rates which can be significant.
- How is the mortgage registered on the property? Some mortgages have lower rates, but are registered as collateral charges which means there’s an extra legal fee to get out of them should you decide to make changes to the mortgage in the future.
- If your current mortgage was insured originally, you’re in luck. Call a broker because it’s almost a guarantee they’ll be able to find a better rate.
© Sandra Lastovic is the Principal Broker with the Mortgage Centre in Guelph. With over 15 years’ experience and holds a M.Sc. from the University of Guelph. She was recently ranked at the top 75 agents in Canada by The Canadian Mortgage Professionals annual survey and 2017 Most Influential Women in the Mortgage Industry. She can be reached at 519-763-3900 x1001 or www.skipthebank.ca™
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