Why You Should Never Auto-Renew
When your mortgage term ends, your lender sends you a renewal offer. It’s usually on a piece of paper that looks routine - sign here, choose your term, done. What they don’t tell you is that the rate on that letter is rarely their best rate. It’s their posted rate, which leaves room for them to make more money if you don’t shop around. DO NOT sign that renewal letter without calling me first.
At the end of your mortgage term there is no penalty to move. I can transfer your mortgage to the best lender and it won’t cost you anything. Your bank may have had a great rate initially, but on renewal there could be more competitive rates and specials out there. Even if your renewal date passes, your lender will have to renew you into an open mortgage, with no penalty to move you out. There is no rush.
Your 120-Day Renewal Window
You will have the opportunity to hold a new interest rate 4 to 6 months out from your renewal. So circle that date in your calendar or let me know it ahead of time and I will contact you. I’ll go to work well ahead of your renewal so if rates rise, I’ll have a low rate held for you. If rates should fall, I’ll be able to follow the rate down on your approval as well.
It’s a unique point in your mortgage where you are in a win-win situation. You just need to contact me ahead of time and let me know your renewal date. Don’t let your bank play games - make sure you have their final offer in writing before making any decisions.
- Contact me 4 months before your renewal date for the best options
- Rate holds are available - lock in a rate today, close at renewal
- No penalty to switch lenders at renewal
- Switching lenders at renewal typically costs nothing - the new lender usually covers legal fees
Transferring to a Better Lender
A mortgage transfer (also called a switch) means moving your mortgage to a new lender at renewal. There’s no penalty since your term has ended, and as long as no equity is being removed, many lenders will pay your legal fees to facilitate the transaction. It’s a competitive market and they want your business.
I’m always updated on the market and have access to deeply discounted rates and specials not available to the general public, or even many brokers. The difference between your bank’s renewal letter and what I can find you can be significant over a 5-year term.
Fixed or Variable at Renewal? It Depends.
Your renewal is also an opportunity to revisit whether a fixed or variable rate makes sense for your current situation. When you first got your mortgage, you might have chosen a 5-year fixed because you wanted certainty. Now that you’re renewing, your income, family situation, and outlook on rates may be different.
We can plan your next mortgage to best fit your financial and life goals. I’ll walk through both options with you and help you figure out whether locking in or staying flexible is the right call based on your specific situation.