Sep 09 2016
Today, banks are doing a very good job of retaining their mortgage clients, in fact they are renewing in the area of 80 to 90% of the mortgages they hold.The problem here is the consumer is paying a price because more than half of these mortgages are being renewed at posted rates. What does this mean to the average consumer?
Let’s say the posted rate today for a 5 year mortgage is 5.39%, but the discounted rate for that 5 year term was about 3.89%, a difference of 1.5%. That doesn’t seem like a big deal… unless you crunch the numbers! On a $250,000 mortgage amortized over 25 years that makes a difference of about $18,000 in interest that you will pay over the next 5 years….ouch!
I don’t know about you, but if I could save $18,000 I would be pretty happy. So how do you save this kind of money? I recommend you take your mortgage renewal to a mortgage broker and get them to review your mortgage. In fact, I think an annual mortgage review is a great service that many mortgage brokers offer today. Think about it, most people meet with their financial planner yearly to review that $50,000 RRSP, but those same people often have much more owing on their mortgage and leave it year after year, renewal after renewal really giving it very little time or thought?
A Mortgage Broker can advise you on not only the rates available, but often more important options as outlined below:
So the lesson here is, speak to your mortgage broker and let them do what they do best and make sure you ask lots of questions because knowledge is power. If I can spend an hour going through my mortgage with a professional and save thousands, as a businessman that is a pretty good return on investment!