I just love this quote, and really rings true when we are talking about your mortgage renewal. This is because it is so easy just to sign the mortgage renewal from the big 5 bank and get back to your day. Other than signing the renewal statement you don’t have to do anything else. However what you don’t realize is that you will be paying through the nose. The banks are counting on you to take the avenue of least resistance as this is how they will make the most money.
Here is the thing, the big 5 banks are very competitive with the broker channel when it comes to you taking out the initial mortgage in most cases. However when it comes to your mortgage renewal they are counting on you being lazy and just signing the renewal statement and returning it to them. In fact they get between 80-90% of the renewals back to the because people are lazy and also because they don’t know any better.
However there is a better way. The big 5 banks are going to send you a renewal statement at posted rates. As of today this means 4.79% for 5 years, 3.49% for 3 years or 2.79% for 1 year. Now depending on whether your mortgage was insured (CMHC or similar) or not, this could mean a rate from 1.84% 5 year fixed ( uninsured) or 1.59% (insured) through the broker channel.
Let’s use an example, say that your uninsured mortgage is coming up for renewal with one of the big 5 banks. Your balance after 5 years is 225K. So at 4.79% 5 year fixed your monthly payment will be $1,453.13 on a 20 year amortization. Now with one of my monoline ( that is what they call non bank lenders) can do it at 1.84% over 5 years, this will give you a payment of $1,120.53 on a 20 year amortization. Now here is the fun part, this will save you $332.60 a month or $19,956 over 5 years.
Now isn’t a little upfront work worth a possible savings of almost 20K over the next 5 years. Now the work is nothing strenuous, it’s just a little paperwork and possibly an appraisal if needed, but this is hardly anything compared to your potential savings over 5 years.
I look forward to hearing from you in regards to your mortgage needs.
p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).