Renewing A Mortgage

Organizing a new mortgage loan may definitely be considered as a landmark event in one life. This gains significance from the fact that it is very seldom that one gets an opportunity to sign his or her name and instantly take on the accountability for a large piece of debit calculated in six figures. As such opportunities come merely once or twice in one's entire lifetime; they are of immense importance to everyone. Consequently, this discussion commences with some counselling on renewing a mortgage. In fact, renewing a mortgage is commonplace and one may easily do this about half a dozen times, if not more, unless the home is owned by him or her and, at the same time, it is free and clear.

When you go to purchase a new car, will you ever agree to pay the price of the vehicle catalogued on the sign put on the showroom window? Probably, no sensible buyer will ever do this. The same rule applies when you are arranging a mortgage. So, if you are willing to pay the mortgage rate prepared by your bank, you will be making the same mistake as you would have done if you had paid the listed price of the car. The only exception being, this time the mistake would be five times worse and cost you several times more. Hence, the thumb rule is to never ever renew a mortgage without endeavouring to find a better agreement. In effect, all of us should consider a mortgage renewal as a new prospect rather than treat it as a mere procedure. Having gone through the options that you had accepted the previous time you had organized a mortgage loan, now it is time when you are once again in the driver's seat and all set to make a better deal. Well, below we will be discussing a few aspects that will enable you to achieve this.

  • Explore the market: Try to ascertain the prevailing mortgage rates and also what they are likely to be in the near future. Next, try to find out the different agreements offered by different lenders.
  • Contact your lender: If luck is smiling on you, it is possible that you will simply get a fantastic deal that is better than your existing mortgage and this will eventually end your quest for renewal. Alternately, you should seek the best offer made by your existing lender and visit others to find out if you are able to get a better deal. So, it is essential to remain in touch your lender. You may call, e-mail or even visit your lender. It may be noted here that these days, it is even possible to negotiate a mortgage electronically by means of e-mail.
  • Select your lender: The easiest way to keep your existing mortgage is by providing your bank another, and possibly the last, option to hold on to your business. Honestly speaking, the expediency of maintaining a status quo is perhaps worth a gradual enhancement in the mortgage interest charges.

In the event of your existing lender disagreeing to offer you your desirable rate, you are free to approach any new bank, mortgage broker and/ or credit union - you will be surprised to find out how eager they would be to take over your business. Most frequently, their keenness to take over your business will be reflected when they offer to take in any or all legal and administrative expenses concerned with the reassignment of your mortgage loan. Remember, at times these expenses may comprise more than a few hundred dollars, which you would have been required to bear otherwise. In addition, you may be required to pay a mortgage discharge fee of anything between $150 and $250 to your current lender for being able to transfer your business to a new lender. In such a situation, remember to ask your new lender to take in this expense too - usually, they will do it willingly to beat their competitors from securing your business.

Desirable mortgage rates in your scope

Not long back, a simple flaunting of bargaining ability enabled one to avail a one full per cent concession on his or her fixed rate mortgage. These days, such deals are so common that one will even find the banks advertising these discounts in the pamphlets that are put in your every day newspapers. These days you do not have to possess a bargaining skill or be in good terms with your bank to avail this facility. In fact, anyone possessing some sense and a respectable credit rating can avail such discounts.

There is little doubt that the banks are now easier to contend with vis-à-vis a mortgage, the fact still remains that one needs to have some confidence in order to avail the desirable deal at a low rate. Below are a few crucial issues that you need to take care of in order to secure the best possible deal.

  • Never be surprised by any special arrangement and give up to it since such deals are not the final thing as far as pricing is concerned. In case you enjoy a rapport with your bank, you may as well tell them to give you an additional concession on the mortgage rate. Never vacillate on this issue. In case you are looking for a long-term mortgage, say for around five years or further, and if the closing date of your home acquisition is drawing close you have more controlling power while bargaining the mortgage renewal. Considering the present conditions, where the interest rates are fluctuating rapidly, it is likely that the banks would be unwilling to grant a very low interest rate on the mortgage loan only for a few months.
  • Though all banks offer them, it is always advisable not to place any stock in posted mortgage rates. At times, the posted mortgage rates also vary from one bank to another, but, in any case, these are minor issues. In fact, the discounted market rates are there every where and you just need to find them.
  • Teaser Rates: When you seek for the mortgage rates in the market, you will find that some lenders will be offering camouflaging rates. These lenders would be offering unusually lower rates for the initial only some months and would eventually alter into an elevated interest rate. Such rates are usually makes the grade of deceptive advertisements or promotions. In case, you try to scrutinize these transactions, you are bound to realize that it is always wiser to bargain your personal concession.
  • Although the banks unlawfully need that you get them some business for arranging a mortgage, often called tied selling, they would be keen to offer you the desirable rate as well as stipulations provided you give them something like your RRSP (Registered Retirement Savings Plan) account. In case you are keen on doing something like this to secure a mortgage agreement, you are free to proceed. However, it is important to take care of things so that it doesn't hamper you economically or result in some unnecessary problems. Always bear in mind that in case your bank does not agree to offer you the desired mortgage rate, there are numerous other banks, mortgage brokers and credit unions which are keen to take up your business.
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