5 things to know about renewing your mortgage

February 11, 2014 | Posted by: Mike Garganis

The Bank of Canada has kept the key interest rate steady and banks have been quietly cutting their rates for fixed and variable mortgage rates. They are also fighting for a shrinking pool of borrowers so it sounds like a great time to renew your mortgage.

Yet many Canadians simply sign their mortgage renewal papers. A 2011 Manulife survey found that almost two out of three Canadians surveyed stayed with their current mortgage provider and didn’t negotiate.

I guess money grows on trees. People are busy, the maturity dates comes and goes and they just sign back whatever is offered.

If you are renewing your mortgage, here are five things to keep in mind before you sign that document.

1) The posted rate isn’t the best rate

Banks use the posted rate to provide a value proposition to their clients. They often start with the posted rate and then offer discounts to preferred clients.

Consumers need to educate themselves and shop around. Even if you get the secret or discounted rate, if you only get rates from one financial institution, you may still be paying a premium compared to other lenders.

People really trust banking institutions, and the banks play on that a little bit. They’ll play dumb, offering the posted rate and leave it up to the borrower to negotiate and play the game.


First, I take my business very serious, so I don't play games, and I know negotiate for you...not against you!


2) Shop around before you negotiate

If you do go to the banks or deal with a bank mortgage specialist, do your research before you begin negotiations and always ask for a better rate.  It's sad, but true, you have  to ask for it from the bank.  When it comes to researching mortgage rates, it’s very easy – just go online and check the rates offered by various lending institutions.


Most Mortgage Brokers do this running around for you.  Find one that you trust, ask lots of questions and if you feel comfortable with their knowledge and advice for your situation, work with them... or give me a call.

3) Bank or broker?

The general belief is that brokers can offer a better rate than banks due to their access to multiple lenders. The Bank of Canada survey found that using a broker can result in getting a lower rate. Part of that is due to them getting multiple quotes from various institutions.

I have access to 50 lenders that include banks, credit unions and private lenders.


4) Being good and loyal to your bank makes no difference to your rate

Are you paying down your mortgage and cutting years off your amortization? That’s great but it won’t make a difference when renewing your mortgage.

Are you a loyal customer? Have you been with your bank for years and do everything with them? That also doesn’t count when it’s time to renew your mortgage. A 2011 Bank of Canada paper found that loyal customers may not get as good a deal with their bank as they would if they went to a different bank as a new customer. So if you’re looking for a better deal, considering going to a different lending institution.


Take a few minutes to compare what you are being offered is the best deal for the current time.  It could save you a ton of money.


5) Check the terms before you sign

The cheapest rate may not be the best rate so always read the small print before you sign. Make sure the rate you choose offers other options such as the ability to pay extra on your mortgage and clearly defines any penalties should you decide to break your mortgage early.


This has been a huge topic on many social sites in the past few years.  BE VERY CAUTIOUS when you see a really low rate not offered any where else.  Just go by the old saying, "If it's too good to be true..."


If you are coming up for renewal, it doesn't hurt to have me review your renewal offer to ensure you're getting a good deal.  I may just surprise you and have a better deal.


Mike Garganis



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