At mortgage renewal time your mortgage is completely OPEN. This means the contract with your current mortgage lender is over. You do have the option to either stay with your existing lender or move too another lender for better terms and conditions. Moving to a new lender will require you to re-qualify, however if the terms and conditions are much better then what the existing lender is offering, it makes sense.
To switch or transfer a mortgage to a new lender is not allot of work. If it is a straight switch where only the existing mortgage amount is being transferred there is no legal signing involved. If there is new money be added to the mortgage so the mortgage amount is changing then a lawyer will need to register the new mortgage. Either way it is no more than 1 hour’s work for the client. If you can save thousands of dollars over the term for 1 hour’s work then I think it is well worth it.
The mistake allot of borrowers make at renewal time is accepting the terms and conditions sent out by their existing lender without comparing with other lenders. Your mortgage broker can compare mortgage rates and terms for you and let you know if there is a better offer available that makes sense to switch. A report recently released by CMHC stated that 85% of Canadians sign off on their renewal agreement with the same lender without checking for better terms and conditions. Given the fact that most banks will send out renewal agreements without offering competitive discounted mortgage terms in the renewal agreement the borrow is losing out on thousands of dollars in savings over the term and the bank is making thousands of dollars in profit by not having to offer a competitive mortgage interest rate.
If you have a mortgage coming up for renewal within the next 6 months send me an email or give me a call. I can provide you with current mortgage options available to you. Mortgage rates can be held for 120 days or even six months in some cases. This is great way of protecting you against a rate increase.