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Have Us Review Your Mortgage Renewal Before You Sign

September 13, 2018 | Posted by: Kelleway Mortgage Architects

Have Us REVIEW Your Mortgage Renewal Before You Sign

Recently I was invited to attend an all-day financial planning seminar hosted by Custom Plan Financial located in Vancouver, BC. From a presentation by Manulife One and several conversations with financial planners, here are a few thoughts to pass along.


In Canada, 50-60% of mortgage borrowers automatically sign a renewal with their current lender after their mortgage term expires (e.g., most commonly 5 years after the original funding date).


As a mortgage broker, I have heard many times from borrowers that the rates their current lender (e.g., big bank or credit union) were offering at renewal were 0.5% to 0.75% higher than mortgage rates currently available elsewhere.


Even after negotiating with their current lender at renewal, borrowers often received a mortgage rate higher than a new customer would receive from that same lender at that same time.


In addition, some borrowers discover that their current advanceable mortgage (which allows them to easily borrow money from their home equity) has a collateral charge attached. A collateral mortgage cannot be transferred to another lender - even at the end of your mortgage agreement - without the help of a real estate lawyer to break your agreement, thus incurring legal costs. Also, on paper, the collateral charge can make it look like you have more debt than you do as the lender can register your mortgage for up to 300% of the value of your home. In effect, there may be no “equity room” left for another lender to offer you a second mortgage secured by your property.


Based upon 2013+ funding statistics, the presenters expect there will be a high volume of borrowers whose mortgages are up for renewal by 2019. If you funded your mortgage in or before 2016, you still may be able to qualify for financing under rules in effect prior to 2016. You, therefore, have an opportunity to avoid some of the newer rules and regulations concerned with financial “stress testing”.


Call us to REVIEW before you RENEW your mortgage. We will look at the product (fixed or variable), lender (current or switch), terms (rate, length of mortgage term, and amortization) and other factors that may affect your debt load and payments. Our office always welcomes your calls to discuss your mortgage renewal options.



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